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EUROPE’S BUSINESS NEWSPAPER 



FRANCE 


Telecom apron strings 
are being untied 


Page 17 



No.31,018 • FINANCIAL TIMES 19® 


World News 


Aquino calls 
national 
state of 
emergency 


dedared a T^aHnnai state of - 
emergency to combat “tfaesert 
dcs ewfl- **pni y w T l *r dfliF - 
uge” caused to the Fhflippiiies . 
by the con ti n u i ng mllitaiy 
rebeffinn. Page 18; Debt acconL. 
to tfouht. Page 4; Share fears. 


Czech negotiation* . 

Foxaiwtkmctfai^«cnrEa3iT 
mentinCfeechoslovaiaa domt 
noted negotiations between - 
Laifidav Adamec, the Compm* 
irisEPrhne Mfrifafw , ^nrl 
Ghdc Pbrum opposition. Page 
18» Socialist tote, Page 2 

Slngfyjob surprises - 

New Indian Prime Minister 


L T <nn-.7-wt.ii^w7ri rrTTc, rrr: n 


sprang a series of surprises 
in Ids aflnmtMnn of jobs to his 
15-man cabinet. Page 4 

Quayfe on Soviets 

Two days after the Malta sum- 
mit, US Vice President Dan 
Quayfe saw lie saw “Kttfe 
change” in Soviet foreign pol- 
icy. Page 6 

Gorbachev taOcs 

President Ifikhafl Gorbachev 
is locked in top-level fa»ifc« an 
East-West relations ala time . 
when his own party is at a crit- 
ical juncture. Page 2 

Israel bans Hussslni 

Israel banned Faisal Hxzssdaf, 
the prominent Jerusalem Pal- 
estinian, from entering the 
West Bank and Gaza Szip, ' 
virtually identifying Mm as 
themostsemorteadaraf the 
Palestinian uprising. Page 4 

China cr Wctei f H K 

China basconiimjed criticism 
of Emm Kong ata meeting 
afthe Slno-Brltisii Joint liai- 
son Group which is preparing 
for China’B resumption of sov- 
ereignty aver the British cot 

any hi 1997- 2*8*4 . 
KoW itogflon tfolsy • 

Helmut Xo^L* West German . 
Chencettor^agestedto thp ; 
HVfiitfhJlri MninCTt fitet . , 

Eanwean'jfidnmaiy nufem . 
(EMXDsbosldjheiJOT^ until 
after Bamfh pmflral Se ct ions . 
in 11 month? timer Page s. ' 

Ostofr ooz ogoos ; 

Norway’s new tripartite cen- 
fee-right Government is to 
abandon, the tough incomes 

policy of its Labour predeces- 
sor. which froze wage growth 
to 4 per ceutftv two years run- 
ning. Page 3 V-.-./ 

Politician bombed 

A bond) explosion in Gua- 
temala CSty, the latest in a 
series of attacks that have 
rocked the capital, damaged 
the borne of Foreijm Munster 
Adel Rivera bias and injured , 
tiro passersby. Bogota car 
bomb. Page s - - i 

Nrawl Issupstlirs at " 

Lebanese president Elias 
Hrawi threatened to resign ’ 
unless he won control of the - 
presidential palace in r^hrtaHa’p 
East Beirut ftmn General 
■ MichelAoun. Analysis,' 

Paged 

Frenchimmigrartion 

The French Government intro- 
duced a high-profile policy 
towards immigrants designed, 
to tighten existing - restrictions 

on new immigration. Page 2 

Sudan taHm coBapM 

.Sudan h*»pdBd for a new round - 
of bloodshed after peace talks 
collapsed an il the SudanPeo- ~ 
pie’s Liberation Army rebels 

accused the government of 
declaring* wsr by bombing ■ . 

Waat, a rebel-held town. 

Bestseller fined 

Begtne Def or ges, the anthor 
of the French bestseller Bine 
Bicycle, ami bar publi shers 
were ordered to pay Margaret 
Mitchell's heirs S'Frfcm 
(5830,000) for plagiarising her - 
novel GoneWithtoe Wind. 


MARKETS 


Business Summary 


Chrysler may 
sell air and 
defence 
operations 

Chrysler, third largest US 
motor Tmmnthcturer, said it 
mi^ aefi lteaero spa rean fl' 
(tefemce PiPrimWIPfl OH HmMlBIR. 

estimated by some Wan Street 
analysis to be worth to to 
*700m.Page 19 

liT-SB Tnftor whhIa fl y t fowr p fairt 

but climbed to close with a 
net gain of 2&2 points at 
2JB&7, the peak of tbesessiim 
after heavy oversubscription 
for the water privatisation 
issues and unexpected develop- 
ments in the property and 
retail sectors. Page 38 

FT - SE 10 O Index 


1869 Dec 


NMB Postbank, newly merged 
Dutch bank which is being 
partially privatised through 
a FI L3fan (S6Sro) international 
offering, announced share 
price of SZL25 for about 30 per 
cent of the shares. Page 19 

KINGHSHER, UK retail group, 
turned the tables cm Dixons 
by launchings takeover bid 
worth 5914m for the electrical 
goods retailer. Page 19 

SAA TL'BI & SaatcM, UK com- 
municattoiisandcogBiulttng 
group, has cut its final divi- 
dend from 8.6p to L6p thereby 
reducing the total-dividend 
from lGp to 9 pl Page 19, Analy- 
sis, Page 22 

JAPANS economy grow 3-9 
. percent in the thinf quarter, ; 
suggesting growth fbr the year 
wffl outstrip predictious. 
Pagein- /; 

WSMProslilrart George Bush will' 

tSgn IqjhilHtiiin wiithnftalng 

a2%year renewal of q US 
" v o lun tary” quota programme, 
which will reshuffle dares 
in the US. imported steel mar- 
ket Page -18 

WEST- Gennaiiy is likely to 
grant a licence to operate the 
country’s secondmobfie phone 
network to an international 
consortium ted by Mamma- 

warm, fferman en g i neeri ng 

group, age 6 

US economfe slowdown, partlo- 

n la rfy ^ mm - 

u&cturing, is predicted in the 
new Federal Reserve’s Beige- 
Book regional survey. Page 
18 

MITSUI Coustnmtum of 'Japan ~ 
is to partner Taylor Woodrow, 
UK property and construction 
group, m London residential 
developments. page J. 

MERRILL LYNCH; fourth larg- 
est dealer in the Eurocommar- 
dal paper market has * 
iriformed clients ft Intends to' 
puU out of the business. 

Page 24. 

HUNGARY is to receive a five 
year Eculbn (tL13bn) loan 
from the European Communtty 
to ease its balance (rf payments 
positioiL p^e S - 

BLOOMlftG&AlJrs; presti- 
gious US department store . 
chain, wfflbe open to buy-ent 
bids due tomorrow butpenarts _ 
suggest ofte^d prices win fell 
short of Gampean’s; the own- - 
ers, espectations. Page 20 

HALT has been told by IMF 
team of inspectors to cat pub- 
lic spending and raise taxes 
if it tntendu to achieve its 1990 * 
paMfe sector dftfirft twyt of 
ftOLAbn. Page 2 

CONTROL Data of the US has 
appointed Lawrence Fertman 
cmrf executive, to revive the 
struggling computer hardware 
and sendees group. Page 20 


New York cfoaa 

$1.5765 . ' ■ ’ 
Lomjonr 

$1^76(1^705) .... 
DM2JB25(8L79) 
FFr9.5025 (9.5275) 
8Fr2_5 (2.4975) 

Y22&5 (225.75) . 

£ index 9 A 2 ( 8 A 49 
HOLD 

Hew Yortc Coiimm Feb 
S40&2 • 

London; '* 

$4040 (same) . : 
HSUOIL fArgiisl 
BroiaFlSrday Jan. ; 

mi75(T&e75) ■ 

CMef price changoa . 
yaMMrday; Ptow IB ’ 


Nm York cton ' 

-DM1.76695 
'FFVCjOSS 
. SFrf^B9- v -' 
YW 4045 - 
.L on do n; ■ 

DM1.766 (1.770) 
FFrfLQ3. (6.065) ■. 
SFMA87 (1J9B5) 
"Y14SB-CI4S.7) : 

, % Index 6&8(0&9) 
Tokyo ciosv: Y143.75 

US UMCHTW 

mm : ■ 

.Fed Funds b£% 
k-mo T/MHeiy Wdos 
i yield: 7A35% - 
Lang Bead: ■ ■ 
*i02g - 
yield: 7.00% / 


PT-SE 100: .. 

2,353.7 {-f 2BL2) 

FT Onfinary: 

1A69A (+23.1) 

FT-Jt AB-StanK 
^.172.68 (+1 J0%) 

New York dose 
OJ Ind. Av. 

2.736.77 (-491) 

SAP Comp 
348.59 

Tokyo: NIMcoi 
37,654^9 (+160.12) 
LONDON HONEY 
3^non*i Interbank;. . 
'dosing 15&% (same) 
Uffo long gfft future; 
Mar90iJ (90fi) 


Thursday December 7 1989 


Angry citizens raid mili tary establishments in search for evidence o 



$ D 8523A 


corruption 


E German leaders plead for calm 


By David Goodhart in East Berlin 



EAST GERMANY’S 
beleaguered Government 
appealed for calm last night 
after wa rning 1 that angry r+H- 

zeos were atte mp t i ng to break 
• into military establi s hme n ts 
apparently in search of incrir 

wnnating iliv iu iw nls related to 

corruption. 

' The warning came only 
hours after Mr Egon Krenz, the 
man who has tried to shore up 
the Communist Party’s crumbl- 
ing authority, resigned as State 
President and was replaced by 
the country's first Don-Commu- 
nist head of state. 

A government commtmiquA- 
carried by the official news 
agency ADN imM* Til the past 
few hours the signs of attacks 
on the premises and facilities 
of the National People's Army 
have been multiplying. 1 * 
a While details remained 
sketchy, ADN appeared to be 
referring to indtoits in which 
crowds of people entered army 
banters and other premises as 
part of a desperate attempt, 
underway for the past three 
days, to stop the destruction or 
concealment of documents 

TnrtTniiTialing CGKTUpt Officials. 

Bather, the appointment by 
the Council of State of Mr 
Manfred Geriach, the Liberal 
Democratic party leader, to 
succeed Mr Egon Krenz as 
President marked a fresh move 
towards oblivion for the old 
Communist order. 


Mr Krenz, In power far 49 
days, had already been 
stopped of most of his author- 
ity at the weekend, when he 
lost the post of Communist 
party chief and the entire Com- 
munist leadership collapsed. 

An emergency party con- 
gress intended to elect a new 
leadership was yesterday 
brought forward to Friday, 
amid calls for a new gen e r at ion 
of younger East Germans to be 
elected to party office and a 
possible change of name for 
the party. 

Mr Gertach's Liberal Demo- 
crats form one of the four 
long-established "block par- 
ties ” which until recently 
backed the Communists but 
have now distanced themselves 
from the discredi ted ru ling 
party, and were instrumental 
m seeming the removal of Mr 
Krenz. 

Until next year's elections, 
effective power in East Ger- 
many seems likely to be shared 
between the coalition govern- 
ment of Communist ana block 
parties headed by Mr Hans 
Mandrow, Prime Minister, and 
the “round table" of official 
and unofficial parties that 
meets today for the first tin«L 

Yesterday the nfHrrfai Com- 
munist newspaper Nenes 
Deutschland reported several 
plans to radicalise and demo- 
cratise the Party at tomorrow’s 
congress, while the Berliner 



New President: Liberal 
Democrat Manfred Geriach 
Zeitung proposed a chaumge of 
name. 

It is now estimated that 
nearly 300,000 out of an origi- 
nal 2m members have left the 
party in the past three months. 
Most are not immediately join- 
ing new parties but some have 
joined the Social Democratic 
party which is accordingly 
picking up momentum. 

Reformers were stressing 
yesterday that even after free 
elections next year the country 
will remain dependent on vast 
numbers of middle- ranking 
officials of the Communist 
party because there are simply 
not enough qualified people 
outside the ruling party. 

One of the most radical eco- 
nomic reform documents pub- 


lished to date, by the economic 
reform group of the State Han- 
ning Commission, yesterday 
proposed a "socialist market” 
model. Although social owner- 
ship would remain at the core 
of economic management, the 
success of the economy was 
also dependent on various 
forms of private ownership, 
said the paper. 

The paper also said that 
most subsidies must start to be 
phased out and wages and 
pensions most correspondingly 
rise. The subsequent creation 
of a real price system should 
allow currency convertibility 
in the near future. 

East Germany’s economic 
reformers are increasingly 
quoting the example of Aus- 
tria - a country also cited by 
Mr Modrow in a recent inter- 
view - noting that it combines 
a high degree of public owner- 
ship with a dominant role for 
the market system. 

Although the need for joint 
ventures with foreign compa- 
nies is no longer controversial, 
one economic adviser yester- 
day said there was still an 
insistence on sticking to 51 per 
cent domestic ownership to 
prevent a “Hungarian sellout* 

The same adviser said he 
was in favour of allowing pri- 
vate ownership In companies 
of up to 300 people, but that 
many people still thought this 
number too high. 


• In Washington, a State 
Department spokeswoman said 
she hoped yesterday's change 
of guard in East Berlin would 
lead to a new regime that bet- 
ter reflected the wishes of ordi- 
nary East Germany citizens, ( 
Reuter reports from Washing- 
ton. 

“We would say that we hope ; 
that these actions will result m | 
a new leadership that Is 
responsive to the aspirations of 
the population,” the spokes- 
woman, Mrs Margaret 
Tutwiler, told reporters. 

“As President Bush has said 
many times, we want to see 
change brought about through 
self-determination achieved In 
peace and freedom," she said. 

• The appeal for calm was the 
top item on East Germany’s 
main television news pro- 
gramme which said that 
Lutheran Church leaders were 
joining in the call, AP reports 
from East Berlin. 

“The church leadership 
insists that in this serious situ- 
ation, people act properly, with 
restraint and without vio- 
lence," said the television. 

The National People’s Army 
leadership issued its own state- 
ment. saying the military 
would repel illegal access to 
“weapons, munition and fuel.” 
Newspaper develops taste for 
digging. Page 2; Veto on new 
Czech Cabinet make-up. Page 
IS 


Investors rush 
for shares in UK 
water companies 

By Clare Pearson and Andrew Hill in London 



BRITAIN’S £5-24bn ($&2bn) 
water companies' flotation has 
been oversubscribed after a 

last minute rush by the pubfic 

to apply for shares ahead of 
the closure of the offer-far-sale 
yesterday morning. ' 

E xp ec tatio ns' were that the 
often to ^the pnbBc had been at 
least two times subscribed, as 
would-be shareholders formed 
huge crowds outside receiving 
centres around the country to 
beat the 10am deadline for 
hand deliveries of forms. 

An announcement from J. 
Henry Schroder Wagg, the 
merchant bank advising on the 
flotation, on whether the 
£l.Zhn worth of shares Initially 
allocated to the public has 
been more than 1.75 times sub- 
scribed - enough to trigger 
clawbacks from overseas hold- 


ers - is expected today. 

LG. Index, the fiimruHal 

hnnlnna im n malriwp a form Of 
advanced market in the shares, 
has consistently quoted the 
shares at a p re miu m to .theft* 
lQOp partly paid price. Yester- 
day the bets were that the* 
shares would dose at premium 
of 25 per cent an the first day 
of stock market dealings. 

However, Mr Michael 

TTmirarri, Rrw ri mnmgmt Ifiniater 1 

in charge of water privatisa- 
tion, denied suggestions that 
the Government was selling 
the shares too cheaply at the 
240p fully paid price, 
announced on November 22. 
“The stock market has gone up 
by nearly ISO points since we' 
did the pricing. I suppose peo- 
ple will say we knew it was 
Continued cm Page IS 






Wttrettn Harts* 

Police turn away prospective investors in the privatisation of Britain's water companies 
at the dosing of applications in London yesterday 


Paris and 
Moscow 
agree on 
Germany 

By Quentin Peel in Kiev 

FRANCE and the Soviet Union 
yesterday spelt out an extraor- 
dinary measure of agreement 
on the Med to the 

status quo in Europe, and to 
go slow on plans for the reuni- 
fication of Germany. 

President Francois Mitter- 
rand of France gave his strong 
sup po rt to the Soviet plan for 
a pan-European “Helsinki 2" 
summit in the next twelve 
months. 

Soviet officials say such a 
summit could reconsider the 
whole relationship between 
East and West Europe, and 
lndnde the acutely sensitive 
question of relations between 
the two German states. 

The remarkable entente 
came after just two hours of 
talks between the heads of 
state in Kiev, the Ukranlan 
capital, underlining the broad 
Identity of views between the 
two European nations with 
most to fear, historically and 
geo-polltlcaliy, from Gennan 
reunification. 

While neither side would 
<■■11 *i> a<i- common grounds an 
agreement, they separately 
melt out far-reaching similari- 
ties in their positions: both 
stressed the reality of two 
legal German states, as recog- 
nised in the current Helsinki 
agreement; both say intra-Ger- 
man relations cannot be 
divorced from East-West rela- 
tions in Europe; both say that 
all European nations most 
have a say In the process; both 
say that any change must 
come peacefully and democrat- 
ically; both say there can be 
no chiwge in the other borders 
and frontiers of Europe; both 
admit that the pressure for 
reunification is real, and can- 
not simply be ignored. 

Mr Gorbachev said that the 
two sides had a “subst a ntial 
discussion” ot the whole Ger- 
man question, against the 
background of “the very tur- 
bulent period through which 
we are Hying." 

The Soviet leader showed 
his continued for the 

reforms in Eastern Europe, 
stressing that the common 
theme in them all was “a high 
level of democratlsatiozi, open- 
ing of society and creating 
str uct u res which will reflect 
the interests of tin people." 

Both leaders underlined the 
need to start from a recogni- 
tion of two separate Gennan 
states as accepted in the origi- 
nal 1975 Helsinki agreement 
and represented at the UN. 

Referring to the growing 
demands within the two Ger- 
Contfamed on Page 18 


West German leaders mourn 
murdered Deutsche Bank chief 


By David Marsh in Frankfurt 

MR Alfred Herr hausen, the 
murdered chief executive of 
the Deutsche Bank. Ms oak 
coffin decked with yeBaw nar- 
cissi, was mourned yesterday 
by the leaders of West Ger- 
many's business and public 
fife in a stdeaun o ut pou ring of 
state sorrow in Frankfurt’s 
rebuilt Gothic caihedraL 
Speaking at the end of a 
2 ^ -hour requiem mass, Mr 
Htfmnt Kohl, the Chancellor, 
Issued a tribute of defiant 
patriotism far a man he valued 
as a friend and adviser: 
“Alfred Henhansen earned the 
merit' of tlte Fatherland." 

— -Mr -Kohl’s dosing words -in a 
15-minute funeral oration 
were delivered In a voice 
husky with emotion. They 
were both a message of grief 
and a firm reminder that — at 
thin time of momentous 
rfamg A in East Germany - the 
fS u mwAfipr to keep the 

theme of German national 
unity at the top of the political 


The Chancellor also warned 
against “character assassina- 
tion" of top businessmen in a 


statement indirectly aimed at 
parts of the West German 
media, which have been focus- 
ing on the concentration of 
power of the Deutsche fawfc- 

Ur Herrhansen, the most 
potent symbol of West Ger- 
many's economic might, was 
HIW by a bomb from Red 
Army Factum terrorist group 
which blew up his armour- 
plated Mercedes in Bad Ham- 
burg, outside Frankfurt. 

Underlining M« pivotal role 
in the Federal Republic, the 
l,000-6tnxng funeral congrega- 
tion yesterday Included Presi- 
dent Richard von Wefzsacker, 
most of the- Bonn cabinet, Mrs 

Htta Smanw iHh , the president 
of the Bundestag, and Mr Karl 
Otto Pd hi, the head of the 
Bundesbank. 

Among the captains of 
Industry were Mr Edzard Reu- 
ter, thfl r ha i rw an of DBimler- 
Banz - of which Mr Herrhau- 
sen was the supervisory board 
chairman - and Mr Bertholt 
Beitz, the veteran Krupp chief. 
Mr Gtovamri Gianni Agnelli, 
the head of Flat, and the US, 
British and French ambassa- 


dors to Boon were in the front 
pew. 

Father Augustinius Henck- 
el-Donnersmarck, a friend of 
the Herrhansen family, landed 
the assassinated chairman as 
not simply a cool-thlnklng 
banka of intelligence and pre- 
cision but also a man of 
warmth and humour. He also 
had failings, and could he 
“impatient aid irritated." 

Mr Kohl reflected that both, 
he and Mr Herrhansen had 
helped- consolidate. !*the .most 
free and peaceful state that the 
Germans have ever had”. The 
Chancellor dwelled on the 
stream of top busi nes s m en liq- 
uidated by terrorist “enemies 
of the republic” since the 
1970s. “Isn’t something wrong 
when leading business repre- 
sentatives are made into tar- 




MARKET RSWTSrClBVffiNC^.-PBgn40; BONDS, Pages 23. 24; 
COMMODITIES. Paoe 32: EQUITIES, Puses 33 (London), 41 (WorW) 


Saatchrs trend-bucking 
come* to an end 

Maurice Saatchi (left), 
, along with his brother 
Charles, founded the 
advertising agency 19 
years ago. But 
recently its share 
price in the UK has 
waxed and waned and 
there is uncertainty 
over the future of the 
group. 

Page IB. 22 

SO AprlcuttUTB 32 

Compart** ...... Ugti Am-Revlewa — IS 

Smarm B World Guide IS 

Companies IMS Commercial Law 14 

Owneee 4 Commodities 32 

Companies — » Crossword 48 

World Trad* • CwlWtfe* 40 

ITilfshi - - - — 7-S Editorial Comment 18 

Companies ■ 28-30 Ewe-epOona - 40 


He said the Red Army Fac- 
tion saw “magnanimity as a 
sign of weakness" and that 
“this democracy will not be 
suffocated". 

But he asked bitterly: “What 
is wrong with the Germans in 
the Federal Republic?" 


EufOpai In her split with EC partners, Thatcher 
will go on and on — 3 

Hong Kong: Vietnam beckons as boat people 

tall screening test , , - 4 

Tnodet CoCom rocked by the crumbling wall . 6 

lam UK regulation rules too detailed 14 

Editorial C ww n eu li The building of Europe; 
Strong case for UK embryo research — 16 

Economic Viewpoint: A win for Germany — 16 

Surveys: World Diesel Engine Industry; Inter- 
national Advertising Separate sections 

Financial Futures 48 Oburvw 18 

Gold 32 r«w Materials — 32 

International bonds . 23-94 Block Markets - 41 

(no. Capital Marfem 23-24 -Wall Street — — 44 

Latter* 1741 -London » 

Lax 18 Tsctmoiopy 13 

Lombard IT Unit Trusts 34-57 

Management — 10 Weather ■ 18 

Money Marfcata -40 - -worid index ; 44 


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Soviet plenum 
set to debate 
pace of reform 

By Quentin Peel and John Parker in Moscow 


PRESIDENT Mikhail 
Gorbachev Is locked in 
top-level International talks on 
East-West relations at a 
moment when Ms own party is 
at a critical juncture. 

A plennm of the Soviet Com- 
munist Party central commit- 
tee is to be held on Saturday to 
prepare for next week’s Con- 
gress of People's Deputies and 
it seems certain to be the stage 
for furious debate on the prog- 
ress of political and economic 
reform. 

At the same time radical 
Awnawdg for reconsideration of 
the monopoly role of the Com- 
munist Party, enshrined in 
Article 6 of the constitution, 
are coming to a head in 
advance of the Congress, fol- 
lowing decisions by East Ger- 
many and Czechoslovakia to 
abandon similar provisions. 

Two senior government fig- 
ures - Mr Anatoly Lukyanov 
and Mr Yevgeny Primakov - 
this week flatly rated out the 
abolition of Article 6. 

But the strength of support 
fen: this demand was reflected 
in a recent session of the 540- 
member Supreme Soviet when 
deputies voted 198-173 that the 
question should be debated, 
with the motion only failing to 
be carried because of the high 
number of abstentions. 

The determination of Mr 
Gorbachev, Mr Nikolai Ryzh- 
kov, Prime Minister, and Dr 
Leonid Abalkin, Deputy Pre- 
mier, to press ahead with a 
strategy to denationalise state 
property and promote market 
relations has galvanised con- 
servative resistance. 

Moscow is again buzzing 
with rumours about the possi- 
bility of changes in the ruling 
politburo, given the conserva- 
tive backlash. 

The position of Mr Yegor 
Ligachev, the leading conserva- 
tive, is the most contradictory; 


ail his public pronouncements 

appear to conflict with Mr Gor- 
bachev’s statements on the 
need for more radical change 
in property relations and the 
centralised planning system. 

Hitherto, however, his posi- 
tion within the leadership has 
obviously been more useful to 
Mr Gorbachev, as a counter- 
weight to demands for more 
radical reform. 

Virtually coinciding with the 
central committee plenum will 
be a meeting of the Inter- 
regional Group within the Con- 
gress of Deputies - the 400- 
plus group of deputies headed 
by Mr Boris Yeltsin, Dr Andrei 
Sakharov and others. They are 
being asked to support a move 
to have Article 6 formally 
debated at the Congress. 

On Sunday, the dissident 
Democratic Union is planning 
a demonstration in Moscow, 
featuri ng a provocative burn- 
ing of photographs of the poHt- 
buro members. 

The highest Soviet officials 
admit that the behaviour of the 
2,250-member Congress is no 
longer possible to predict. 
Despite an inbuilt conservative 
majority, deputies have been 
radicalised by the need to 
report to their constituents. 

The majority are also deeply 
frustrated at being kept on the 
sidelines while the Supreme 
Soviet, elected from their own 
number, has tried and often 
failed to begin creating a new 
legal basis for the Soviet state. 

Mr Gorbachev intends the 
economic debate to be the 
main item on the Congress 
agenda, taking up at least four 
days. 

But the hectic pace of reform 
In Eastern Europe, the worsen- 
ing ethnic relations in Soviet 
republics and the status of the 
Communist party, are all cer- 
tain to force their way Into an 
explosive debate. 


BERLINER ZE1TUNG REPORTERS UNCOVER MORE CORRUPTION AS EVERY DAY PASSES 

Newspaper develops a taste for investigations 


By DavW Goodtiart in Berlin 

WHEN A YOUNG builder 
on the offices of East 
Berlin's Berliner Ztitung at the 
end of October to provide 
details of the luxury home he 
was hoping to build for Mr 
Gerhard Nemmstiel, a senior 
trade unionis t, he unwittingly 
launched East Germany’s fust 
attempt at investigative jour- 
nalism. 

He chose the Berliner Zei- 
tung, which a circulation 
of 450,000, because it had a rep- 
utation for being slightly less 
official than the party organ 
Neues Deutschland and had, 
under the protection of. East 
Berlin party leader Mr Gfinter 
Schabowski, printed a few calls 
for economic reform. 

The paper has now become 
the key source for the daily 
corruption revelations and its 


journalists collaborate in 
exposing former officials with, 
the public prosecutor’s 
office and the new parlia- 
mentary committee on corrup- 
tion. 

According to the 46-year-old 
economics editor, Mr Dieter 
Resch, who has had direct 
responsibility for the revela- 
tions, the ranpaig" to root out 
and expose corruption will last 
at least six months more. 

Yesterday's edition alleged 
that a former leader of one of 
the Communist-allied parties 
held DM250,000 (£90,000) in for- 
eign bank accounts. Today’s 
edition promises news of bade 
imitm leaders’ expensive holi- 
days. 

Mr Beach, like many of the 
country's new leaders, clearly 
finds his new role - as cam- 


paigning journalist - a little 
uncomfortable. Despite a repu- 
tation for reformist economic 
views he was not previously 
considered radical, and was 
recently attacked in a satirical 
magazin e. 

He says he does not enjoy 
revealing just how rotten the 
system has been and fears that 
his paper’s reports could be 
contributing to a potentially 
destabilising atmosphere. But 
he admits candidly; “If we 
don’t do it, somebody else 
will” 

Mr Resch dentes that collab- 
oration with officials from the 
public prosecutor’s office 
removes any requirement to 
respect socialist libel laws and 
riMTmB that “we must be able 
to prove everything". 

He does, however, regret his 


Norway to drop pay IMF warns 
control policy 5S!L°“ , 


By Karen Fossil in Oslo 

NORWAY’S new tripartite 
centre-right Government is to 
abandon next year the touch 
incomes policy of its Labour 
predecessor which froze wage 
growth to 4 per cent for two 
years running. 

The new coalition headed by 
Mr Jan Syse, the Conservative 
party leader, is aiming to con- 
vince trade unions to accept 
wage increases of 3-4 per cent 
in 1990. A recent central bank 
report issued a warning about 
pay rises, saying that "if wage 
growth exceeds 345 per cent, it 
will have unfortunate conse- 
quences for employment for 
into the 1990s." The unemploy- 
ment rate, at 4-45 per cent, is 
currently at its highest since 
the 1930s. 

The former minority Labour 
Government of Mrs Gro Har- 
lem Brondtland implemented 
the tough incomes policy as 
part of a package of austerity 
measures to help put Norway's 


oil-dependent economy back on 
track. The economy plunged 
precipitously in 1986 when 
world erode oil prices fell 
below $10 a barrel from highs 
of £40 mi'Kw in the decade. 

The new coalition Govern- 
ment believes it will succeed in 
keeping down wage growth 
during next spring’s wage 
negotiations because of its 
recent income tax reforms. The 
top rate of Income tax is to be 
lowered to 59.3 per cent next 
year from the present 62 per 
cent, and to 56 per cent in 1991. 

A priority of the new Gov- 
ernment is to improve the sup- 
ply side of Norway’s economy. 
To tills end it has promised to 
increase the efficiency of cen- 
tral and local government 
activities. Adapting the econ- 
omy to post-1992 and lowering 
trade barriers in conformity 
with the General Agreement 
on Tariffs and Trade are also 
expected to contribute. 


A Canadian Perspective 
on International Business. 


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&BINMNGTON 

of Taranto, Ontario, tmd London 


Three, pre-eminent Canadian law firms: 
DESJARDINS DUCHARME 

of Monacal, Quebec 


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wing international 
egai services to 


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activities of Canadian clients and to provide Canadian 
international businesses with interests in Can 


TORY DUCHARME LAWSON LUNDELL 

wiUcondua its practice from the London office of 
Tory, Tory, Desluwri^&Bhmington which, opened in 1966. 

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Telephone: 01-831-8155 
Facsimile: 01-831-1812 
Telex: 947589G 

Plans call for the opening of a second office m the Far East in 1990, 
and in other international business centres in tbe years ahead, 

Each firm tuill be able to draw on the expertise of its affiliates while continuing to 
practise independently vjuhin Canada. 


Toronto 

TORY, TORY. DejLAURIERS A BJNNINGTON 
Suite 300Q IBM Tauter, Box 270 
Tororua- Dominion Centre 
Toronto, Ontario M5K 1N2 
Telephone.- (416) 865-0040 
Facsimile: (416) 865-7394 
Telex: 06-22535 


Montreal 

DESMKDKN9 DUCHABHE 
Bureau 2400 

600 rue de la Gauchedm Quest 
Monaiai, Quebec H3B 4L8 
Telephone: (514) 878-9411 
Facsimile: (514) 878-9092 
Telex: 05-25202 


Vancouver 

LAWSON, LUNDELL, LAWSON A MdNTOSB 

Suite 2800, Vancouver Centro, Box 11506 
650 Wat Georgia Street 
Vancouver, British Columbia VSB4R7 
Telephone: (604) 685-3456 
Facsimile: (604) 669-1620 


Italy on 
debt target 

| By John Wyles in Home 

THE Italian government has- 
been told by a sharply critical 
team of inspectors from the 
International Monetary Fund 
to cut public spending and 
raise taxes if it really intends 
to achieve its 1990 public sec- 
tor deficit target of L133,000fan 
(£65bn). 

Achieving the target - 
equal to 11 per emit of gross 
national product - has to be a 
“minimum objective" if Italy 
is to have any hope of curbing 
by 1992 the growth of a public 
debt which Is now broadly 
equal to gross domestic prod- 
uct, says the 7-page report 
presented this week. 

Outlining the case far mea- 
sures over and above the draft 
1990 budget which parliament 
Is now considering, the IMF 
team say they have “many res- 
ervations" about whether the 
deficit target will otherwise be 
met Spending controls appear 
“fragile” in many respects, 
they say, while interest pay- 
ments trill be higher than fore- 
cast, as may be public salary 
costs after a new wage round. 

Badly needed reforms of 
health service spending are 
“all in the future", while 
spending allocations already 
approved but not yet drawn 
down could easily cause over- 
spending as next year's 
regional elections approach. 
The report says that all of 
things could cause a def- 
icit next year of L140.000- 
145,0001m unless the govern- 
ment considers cutting aid to 
the regions and public Indus- 
tries as well as reducing 
spending on p en si on s. 

Waning of the teats bring 
ahead with the lifting next 
year of all captal controls and 
the acceptance of a narrower 
oscillation band for the lira in 
the Exchange Kate Mecha- 
nism, tbe IMF says only action 
on the budget deficit and a 
strict incomes policy in both 
the pnhllc and private sectors 
can “lead to a better evolution 
of prices and maintain the 
competitiveness of the Italian 
economy." 


slowness in publishing frill 
details of the activities of Mr 
Alexander Schalck-Golod- 
kowskl, the fugitive 
former currency trading 

chief. 

The newspaper gave the 
authorities a dossier on Mr 
Schalck at the end of last 
month, and published a 
detailed story about him 
December 3. 

Mr Resch will not reveal bis 
sources for that story but says 
that the original source for 
most of the daily corruption 
stories comes from ordinary 
readers. “They used to tell us 
these tilings in the past too, 
but we didn’t believe them,” he 
admits. 

Tbe ordinary readers are 
particularly interested in tales 
of socialist hypocrisy - "Did 


you know, for e xample , that 
there are 11,000 millionaires In 
East Germany?" be asks. 

. After a. lifetime of direct 
pol i t ical direction "which dis- 
appeared virtually overnight , 

according to Mr Resch, the 
paper certainly has the capac- 
ity, If not always the will, to 
dig around. It currently 
employs 90 journalists to fill 
ei gh t pages and also uses a lot 
of newsagancy copy. - 
All Journalists are well 
trained, with at least four 
years’ study at the Sari- M a rx 
University in Leipzig, text Mr 
Resch says half Of than could 
disappear without any differ- 
ence in the paper’s outwit. 
"Too many journalists either 
do nothing - or just ask every 
day, ‘What shall I do?* They 
don't think,” he says. 


EC to lend Hungary 
Eculbn over 5 years 


By David Buchan in Brussels 

HUNGARY is to receive a 
five-year Eculbn (£730m) loan 1 
from the European Community s 
to ease its balance of payments j 
position. Mr Henning Christo- 1 
pherseu, the Commissioner ' 
responsible for macro-eco- ; 
nomic affairs, said it was the i 
first loan to be granted to a i 
country outside the Commu- ; 
nity, and would be raised on 
the capital markets in the form 
of a syndicated credit or a bond 
issue with a guarantee written 
into the 1990 EC budget 
The loan, requested by Hun- 
gary in September and 
endorsed by EC leaders at their 
Paris summit, had three "pre- 
conditions” attached to It, said 
Mr Christophereeu. These were 
that Hungary should agree on 
a credit adjustment plan with 
the International Monetary 
Fond and on the terms of sup- 
plementary wwnomle restruct- 
uring with Brussels, and that 
the loan "should not be used to 
replace private credits.” 


While following the overall 
IMF lead in the politically sen- 
sitive job of supervising Hun- 
gary's restructuring, Mr Chrls- 
topheraen said the Community 
would set some “micro -eco- 
nomic" conditions to encour- 
age private enterprise, in addi- 
tion to tiie traditional IMF 
aggregate targets. 

The EC loan would be paid 
out in •three tranches and 
supervised by the Monetary 
Committee. Another reason for 
imposing separate EC condi- 
tions on Hungary was that the 
loan term might- outlast that of 
a IMF standby credit, which is 
usually less Item five y ears. 

The Commission irinw to pay 
Hungary the first tranche in 
the first quarter of next year. If 
Hungary received no money 
before Marcb-April, Mr Chris- 
topharsen did not rule out that 
Budapest might return to the 
idea of a shorter term bridging 
loan. 


G7 to discuss IMF funds 

By Peter Norman, Economics Correspondent 


SENIOR finance ministry 
officials from the Group of 
Seven leading industrial coun- 
tries plan to meet in Frankfurt 
next Monday for further, dis- 
cussion of tbe vexed issue of 
Increasing tbe resources of the 
intm-natirMini Monetary Fund. 

The officials — known as the 
G7 deputies — are also expec- 
ted to discuss Western finanr 
dal support far Eastern Europe 
at the start of a week in which 
several Western international 
bodies will be considering 
moves to help Poland. 

According to international 
monetary officials, next Mon- 
day’s G7 deputies meeting 
could be a prelude to a 
full-scale gathering of finance 
ministers from the US, Japan, 
West Germany, France, 
Britain, Italy and early 

in the new year. 

Such a meeting could pre- 
cede a special session of the 
IMF’s policy-making interim 


Committee. Already, tenattve 
preparations are being, made 
for an Interim Committee 
meeting in the second half of 
January to the hope that it 
might settle the quota issue. 

The question of quotas will 
be raised in Washington tomor- 
row at a meeting of tbe IMF's 
executive board. Although 
some progress hM been wimfa 
recently, the positions between 
the mam IMF member coun- 
tries are still far apart. 

The US has said it will back 
a 35 per cent increase in quotas 


drawing right level and has 
indicated that it might support 
a bigger boost. Other countries 
such as France support a dou- 
bling of quotas. 

The IMF member countries 
also have to settle the dispute 
over membership rankings; 
with Japan seeking to jump to 
number two position after the 
US. 


France tightens immigration controls 


By Ian Davidson in Paris 

THE French Government 
yesterday introduced a high- 
profile policy towards immi- 
grants designed to tighten 
existing restrictions on new 

The move follows Sunday’s 
breakthrough by the right- 
wing National Front party in 
by-elections at Dreux and Mar- 
seilles. In both seats, the party 
campaigned on an overtly 

anti-immigrant platform. 

The Government yesterday 
responded by underlining 
long-standing curbs on immi- 


gration. “The economic situa- 
tion of France no longer allows 
it to be a land of immigration,” 
said a government spokesman. 
In principle, new legal immi- 
gration has been at a stop 
since 1974, apart from family 
reunions. 

New restrictions announced 
yesterday are aimed at tighten- 
ing up on fl lpg al imm igrants. 
who may amount by some 
guesses to as many as lm, on 
top of approximately 4m legal 
immigrants. In addition, the 
Government aims to speed up 


the processing of applications 
fix- political asylum, which are 
likely to have doubled this 
year to 60,000. 

In the past, delays were so 
long that many applicants 
were effectively able to settle 

as Qfegal irnmlgraTitB. 

Tbe Government will also 


of immigrants Into French soci- 
ety through a permanent Min- 
isterial Committee; which has 
been formed to give extra help 
with ho using, jobs and educa- 
tion. 


Brussels 
says Japan 
must curb 


By Lucy KaMBtf-Nw:. . 
WIKbuit DiwUng 

EUROPEAN commissioners 
yesterday agreed. that utranti- 
tional period was. needed, to 
protect EC car-»akera trom 
Japanese imports after the lift- 
ing of national quotas in 1893. 
This would consist Of* votan-. 
tary restraint arrangement to 
cover imparts and possibly 
cars assembled tttEarqpe. 

The agreed position, drifter- 
atriy devoid of detail- 1b a com- 
promise between the views of 
Mr Martin Bangmnann, inter- 
nal Market Commissioner, who 
favoured complete Uberausa- 
ttan of markets after 1993, tad 
countries Uk» Franco and Italy 
which wanted - an array of 
restric ti ve measures, including 
local content rates, European 
quotas, and firmly established 
reciprocal access to markets. 

Brussels has ducked putting 
a limit on the transitional 
period, or giving any idea how 
the monitoring arrangements 
would work. The ainvrald Mr 
Frans Andriessen, External 
Affair ? Commissioner, was la 
smooth transition from restric- 
tions to the final situation of 
an open market”. 

The proposal will be dis- 
cussed by member states -later 
this month, when some will 
push for a short period of2-3 
years, and others wanting w*n 
over five. 

Mr Andriessen said Brussels 
had no intention of imposing 
local content rates, which in 
any case were prohibited under 
Gatt However, Japanese pro- 
duction within the EC might 
be monitored during the trann- 
thma! period. 

The Commission would not 
serit to establish a formula fir 
Unking the opening of the. 
European car market to that of 
the Japanese market, bat 
would simply attempt to obtain 
an I m provement In the broad 
balance of trade flows. 

Most commissioners argeed 
yesterday that national quotas 
should be phased out as soon 
as possible. 

A fresh cdl -for strict reci- 
procity between the car Indus- 
tries of the EC and Japan yes- 
terday came from Mr Jacques 
Catvet, president of PSA, the 
producer of Peugeot and 
Citroen cars. 

Mr Calvet urged that the 
European market, should only 
be opened when Japan and the 
EC had a more equal penetra- 
tion of shell . others’ markets, 
with local production subject 
to strict local content criteria, 
fixed on a "pragmatic” case- 
by-case basis. 

That meant Tokyo should 
allow tin EC to sell half tine 
number of cars in Japan (half 
the size of the Community 
market) as Japanese producers 
export to tbeSC. 

Only then would EC and 
Japanese car. producers be 
competing on equal terms, he 
argued; Last year, Japan 
exported 12m cars to the EC, 
roughly 11 times more than the 
Community’s car sates in 


FINANCIAL TIMES 

Published by lh» Financial Tinea 
(Europe) Ltd„ Frankfurt Branch, 
(Gidouetutrasw 54, 6000 Frankfurt- 
am-Main 1: Telephone O69-7S980: Trio. 
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McCkan, C.TA Danjen A-C MtOar, 
DJLP. Palmer, London. Printer: Frank- 
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Prankfiat/Main. Rcspansiblo editor: Sr 
Geoffrey Osul Financial Timas, Num- 
ber One Southwark Bridge, Loudon 
SEt 9HL. 

« Tbe Financial Tfama Ltd. 1989. 
FINANCIAL TIMES. USPS Nd 
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3 


FINANCIAL TIMES THURSDAY DECEMBER 7 1989 



EUROPEAN NEWS 


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Kohl wants 
to put off 
EMU talks 

Bjjtactf Marsh riri Bonn ■ ■. 

MR HEIiMDTTKOHL, tbs West 
German ChanceHor, -* has 
suggested to French gov- 
ernment that a planned inter- 
governmental conference to 
prepare the ■way. for European 
mo net ar y .u nion (Efim) should 
Be. delayed imtH alter Botm’s 
general elections • fe ll 
-months*- time!. • 

The letter, whfchlslikely to 
ffisqqiolnt tmt notftradamen- 
tally surprise President Fran- 
Mitterrand, bus Been sent 
m advance of this weekend's 
Community cnmmi f at Stras- 
bourg, officials said here yes- 
terday. -■* - • rr ; ; ■; • - - •> . 

Wldld giving basic support; 
to tfae goal of EMU, the tetter 
proposes that changes In the 
Treaty of Borne to nuke mone- 
tary union- possible shonld 
come into effect by 1994 — the 
date of -the 1 next ffecttoas to 
feeEHropean Parliament. 

This is seen lnBonn as a 
way of sWesteppine Mr Mkt- 
terrand’s proposal that an 

faterffl Wmnpn toV «mfl»w«iw 

(Hi ftiwn khimM be held - i n the 

gwwW t hay of nmt w«r . 

: Mr Kohl, backed byMr Theo 
Walgd, the Finance JDnister, 
regards the French-backed 
date as too rody because of 


posate to weaken the Bundes- 
bank's --control’ over- 1 the 
IHKark. 

Differences between Mr 
itnhi and Mr Mitterrand over 
the question of EMU already 
came to tin surface when the 
-Fiend psddentndiedBnm 
-last month for the la st bt-an- 
nual * Franco-German s mtimi L 
Mr Hans-Bietrleh Genscher, 
the Bonn Foreign Minister, 
has been htidfng out for an 
inter govanemntaf conference 
im EMU lo be convened in fee 
second half of next year. In 
accordance - with- French 
wishes. '. • . 

!l *Mr Genscher is- concerned 
feat Bonn’s failure to back 
fete date may be seen in Paris 
as a sffpptng of fee- Federal 
RegmhUc’9 •• eohnnitmeirt to 
western i ntegr ati on at a- time 
of rapid diangw in relations 
wife the East. 

However, fee British gov- 
ernment, > highly sceptical 
about fee prospect s for fur- 
feengobig monetary coopera- 
tion, Is Hkrfy : to bo denoted 
-feat Bonn and Paris- are not 
form ing a common front over 
fee issue. 


UK prepares to polish its tarnished European reputation 


MB Douglas Hurd, the British 
Foreign Secretary, has rejected 
dftte&m&Tbat the UK Govero- 
■ inenfcdoes not have a strategic 
view of Europe and has indi- 
cted that he will make a 
determined dhd-io reftahish 
Britain’s tarnished European 
reputation. 

Mr Hurd, though careful not 
tp . stray hum fee well-known 
European policy principles laid 
down by Prime Minister Mar- 
gabret Thatcher, dearly Indi- 
cated in an intervtew with the 
Financial Times- feat Britem 
bad to project a more enthusi- 
astic pro-European faup *- . 

Mr Hurd rejected criticisms 
that the Government did not 
-have a grand design for 
Europe, arguing feat fee 1992 
single market project was 
largely a- British creation. Bat 
there was no point in setting 
gnraaHstlc targets for new 
developments before the task 
in hand was completed. 

“We do have a longer-term 
idea, l think part of my job, 
while Fm here, is to identify, 
wpiarfn p qd build on a very 


wide measure of agreement, 
not Just in the Conservative 
Party, but in fee country as a 
whole, m what Kind of Com- 
munity we want in fee longe*. 
term. I think there’s a very 
large body of opinion, certainly 


Robert Mauthner 
talks to British 
Foreign Secretary 
Douglas Hurd about 
the issues Bkefy to 
be raised at the EC 
summit In 

Strasbourg 


fee majority of Conservative 
Members of Parliament, who 
have long ago Shed a sort of 
basic antl-E aropeanlsm, who 
thfafc- membersh ip of the Com- 
munity is a good thing and 
who accept it is not static and 
is bound to develop.” 

The Foreign Secretary said 
that p ^bn n would be put- 


ting forward any great new 
scheme for fee future develop- 
ment of the Community in 
Strasbourg. But that did not 
mmn that it was devoid of 
thoughts on the subject. “We 
have very clear ideas about the 
opening to fee East We do not 
agree with same people in this 
country that m>6 ?hopid take 
the opportunity of events in 
Eastern Europe to expand the 
Community's membership so 
quickly ***♦ it would lead to 
its dilution. We believe that 
full membership of the Com- 
munity shtmid stay as it is.” 

On the other fomd , it was 
very important that the negoti- 
ations about to begin wife the 
European Free Trade Associa- 
tion countries should result in 
a different- relationship with 
the Community and that new 
types of association agree- 
ments should also be worked 
out wife newly democratic 
gawtorw European countries. 

Mr Hurd confirmed feat, if 
Britain’s partners decided to 

hold an in ter -governmental 

conference to discuss treaty 


changes required by the set- 
ting up of a European Central 
Bank and other aspects of eco- 
nomic and monetary union, 
Britain would attend it "The 
empty chair is not a British 
concept" Mr Hurd said. But he 
made it plain that Mrs 
Thatcher would vote against 
holding tht» conference. 

That did not mean that 
Britain was In favour of stag- 
nation and immobility. 

The Government merely firit 
that moves towards economic 
and monetary integration 
should follow a logical 
sequence. 

First of all, the angle Euro- 
pean market bad to be com- 
pleted. Then, fee Community 
should move on to stage one of 
the Delors Flan for European 
Monetary Union (EMU), which 
foresees all member countries 
joining the European 
Exchange Rate Mechanism 
(ERM) and fee abo litio n of all 
exchange controls. The 12 
could then “organise their 
thoughts" about the future 
shape of EMU and other 


aspects of the Community’s 
development 

“It seems to me that when 
you say stages two and three 
(of the Delors Plan for eco- 
nomic and monetary onion) 
have to be worked out in the 
light of your experience of 
stage one, you cannot then say 
we are going to draft treaty 
amendments a month or two 
after stage one has started. It 
isn’t logical. Such treaty 
amendments should come at 
the end of the whole process, 
not at the beginning." 

Though admitting that the 

differences between Britain 
and its EC partners on eco- 
nomic and monetary union had 
not been bridged, Mr Hind did 
not foresee a great row in 
Strasbourg over Britain’s con- 
tinued opposition to the pro- 
posed Social Charter, which is 
backed by most of the other 
members. ”1 thfak there wiQ be 
an agreement to differ without 
great resonance on either 

side." 

Editorial comment. Page 16 



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Hurd: “We do not agree with some people ... that one should 
take the opportunity of events in Eastern Europe to expand EC 
membership so quickly feat it would lead to its dilution.” 


In her split with EC partners, Thatcher will go on and on 

Don’t hold your breath for a final Clash of Titans with Mitterrand in Strasbourg tomorrow: there will be sequels 


M EDIA hype has given the 
European summit opening 
in Strasbourg tomorrow all 
fee advance suspense of a final 
Clash of Titans, with Mrs Margaret 
Thatcher pitted against President 
Francois Mitterrand as the battling 
champions of two irreconcilable 
views of the European Community. 

. On this occasion, however, media 
hype is . likely to be doubly wrong. 
Che, President Mitterrand will get 
his way, wife a decision to lannch 
W m nmwin and Mmufany T Tnfnn at a 
special conference next year. But, 
two, nothing final will have been 
settled after alL Stand by for another 
heroic encounter in Return of the 
Titans next year; and the year after; 
and on and oh on. 

- Douglas Hurd, the British Foreign 
Secretary, gave the game away this 
week in Paris. He said that Mrs 
Thatcher would oppose an Inter-Gov- 
ernmental Conference in Strasbourg; 
hut he added that if such a confer- 
ence' were held after all, Britain 
would take part , 

This is an advance promise to sur- 
render. Mrs Thatcher knows her hos- 
tility to an 1GC will not give her a 
veto; , the French can and probably 
grtii nmarter an nwru iiwiming major- 
ity vote. That is what happened at 
fee Milan S um m it of‘1985, «nd it led 


to the sing fo European Act in Lux- 
embourg later that year. So Mr Hurd 
is, in effect, virtually inviting the 
majority to set up their conference. 

Some people believe significant 
uncertainty remains whether the 
West German government win go 
along with President Mitterrand. In 
the face of the political earthquake 
in East Germany and in Eastern 

IAN DAVIDSON 

ON EUROPE 

Europe, Chancellor Helmut Kohl 
might prefer to hang hfli-t ft -nm g 
major strengthening of German inte- 
gration in Western Europe, espe- 
cially a uriwnip which megte mis- 
givings from West Germany’s 
central hank. 

In fact, the situation is so politi- 
cally rfwr gwri that Mr Kohl hag no 
neutral options, ««d therefore little 
freedom of movement. Any German 
wavering in Strasbourg will be inter- 
preted as a major political decision 
of principle. If he were to fell to vote 
with president Mitterrand, the world 
would conclude that West Germany 
had riprfifcri to recover its political 
freedom, regardless of the con se- 
quences far the EC - or tar the 


- West generally. After everything 
feat Mrs Thatcher done in the 
Community and in Nato, he cannot 
now taka her side, unless he has 
indeed decided to reduce Germany's 

commitment to the Community. 

A decision to set up an IGC looks 
like fee logical next step along the 
road of rfVwer economic and mone- 
tary integration. What the decision 
will not do, however, is pre-empt the 
result of the negotiations In the IGC. 
The British Government will have 
ample opportunity in those negotia- 
tions for opposing the creation of a 
European Central Bank, for resisting 
fjrrnimiTmty constraints on national 
budgetary policies, and for setting 
up procedural road-blocks on the 
way to the later stages of EMU. 

In other words, Mrs Thatcher can 
make a t*cttcal withdrawal at Stras- 
bourg; awH nothing fundamental will 
have been settled between Britain 
flint its European purt-nany. This is a 
pity for Europe, and an even greater 
pity for Britain; and it is a situation 
which has ceased to be even slightly 
amiMhig to the rest of the Commu- 
nity. 

There was a time, only a few brief 
weeks ago, when Mrs Thatcher com- 
manded a wary respect on the Conti- 
nent, for her strong personality, and 
even more for the success of her 


conservative economic policy. 
Respect has melted away with the 
exposure of the failures of the latter. 
The Elysfe Palace now takes a cool 
view of Mrs Thatcher’s tantrums; 
she has always fallen in line in the 
past, they say. and they expect her 

tO fan in lina this Hmo too. 

Some people claim feat the Delors 
Plan is not an ideal recipe; in terms 
of pure guesswork they may be 
ri ght. But the credibility of the man- 
darins of W hitehall is impaired by 
their economic record; the countries 
which are in favour of EMU are just 
as wedded as Britain to liberty and 
democracy, but they have consis- 
tently managed their economies 
much better, over several decades. It 
is not so much the size, as the qual- 
ity of the pro-EMU majority that 
shows there is something fundamen- 
tally wrong Wife RriHah thinking . 

If Mis Thatcher thinks she «m 
mould the EC in her own ftnag n, she 
is living in cloud-cuckoo-land. For 
more than ip years, from 1958 to 
1969, the Five fought off the atavistic 
pretensions of General de ftmUg 20 
years later, the Europeans will not 
now bend to a British neo-GanQisL 
Europe's integration could no doubt 
be guided by many different models, 
each wife its own validity; but the 
lliatcberite model lost out in 1958, 


and has no chance of a come-back in 
1969. There is no point in claiming to 
be different or superior, because 
there are only two real options: to go 
along wife the rest of Europe, or to 
be left out. 

Yet that is not necessarily the end 
of the story. Mrs Thatcher has no 
rhancp of winning the moral argu- 
ment; but fee traditional integration- 
ist Community model could fail, if 
the Community were to start to dis- 
integrate. The question now facing 
the Twelve is whether the Commu- 
nity will have fee cohesive strength 
to withstand the dislocating effects 
of fee changes in Eastern Europe. In 
particular, will the Community be 
able to cope with the attractive 
forces between fee two Germany s? 

T he West German Government 
has repeatedly said, no doubt 
sincerely, that its policy 
remains embedded in the Commu- 
nity and Nato. Many people will look 
ps pprfaiiy closely at what Chancellor 
Kohl says in Strasbourg as a conclu- 
sive litmus test of his true inten- 
tions. Yet in reality tomorrow's sum- 
mit canno t provide clear evidence 
either way, in Strasbourg the 
German Government is almost com- 
pelled to hew to fee conventional 
Community line. As with Mrs 


Tbatcbcr, so with Chancellor Kohl: 
neither con be committed in advance 
to what must be negotiated In fee 
ICC itself. Only then will hard indi- 
cations of true German intentions 
start to become apparent. 

No matter what fee Soviet Union 
and Mrs Thatcher soy, no-one can be 
certain that German reunification 
will not take place next year. We do 
know that it is now high up on fee 
agenda, and feat there ore some sce- 
narios for re-unification which 
would be deeply damaging to the 
Interests of Britain and of Western 
Europe. Any re-unified Germany is 
bound to dominate the Continent to 
some degree; the problem is to 
ensure that a mega-Germany would 
remain tied not just to the West but 
to the institutional rules of the Com- 
munity. The worst possible outcome 
would be a scenario in which West 
Germany in effect preferred re-unifi- 
cation to membership of the Com- 
munity. 

Given the scale erf changes which 
have taken place in Europe before 
our very eyes, which no-one pre- 
dicted and which no-oue can control, 
it seems to be reckless for a British 
government to conduct its European 
policy in nationalistic terms which 
can only be construed in Germany 
as an invitation to do likewise. 











FINANCIAL TIMES THURSDAY DECEMBER 


71959 


OVERSEAS NEWS 


Singh shows flair 
in distributing 
cabinet posts 

By David Housego in New Delhi and Oita Piramal 
in Bombay 




Philippine debt accord put in doubt by coup attempt 

By Stephen Fldler, Euromarkets Correspondent 


MR VJP. SINGH, India’s new 
Prime Minister, yesterday 
named a veteran politician 
with a commitment to dean 
government as bis Finance 
Minister and a Moslem as 
Home Minister in wbat was 
seen to have been an imagina- 
tive distribution of ministerial 
portfolios. 

• The Prime Minister brought 
in Professor Madhu Dandavate, 
aged 65, a long-time Socialist 
with no experience of economic 
management but respected as 
an efficient former minister of 
railways and a pragmatist, to 
bead the F inance Ministry. 

Professor Dandavate said 
that his TTnTnariigfp task was to 
tackle India’s “high degree of 
indebtedness” - suggesting 
that one of the first choices 
facing the Government will be 
whether to go ahead with fresh 
borrowing from the Interna- 
tional Monetary Fund or to try 
to avoid this through import 
controls. Mr Dandavate said 
India's external debt, including 
deposits by non-resident Indi- 
ans, was about J60bn and that 
the debt servicing ratio was 
more than 30 per cent 

The Prime Minister named 
Mr Ajit Singh to the other 
senior economic post of Minis- 
ter of Industry. A northern 
fanners’ leader, he is also a 
computer engineer trained in 
the US who has worked with 
IBM. 

Mr Shigh kept the sensitive 
Defence Ministry for himself 
but caused widespread surprise 
in appointing Mufti 
Mohammed Sayeed, aged 53, a 
Kashmiri-born Modem and a 
former minister under Prime 
Minister Rajiv Gandhi, as his 
Home Minister. 

Mufti Sayeed win therefore 
have responsibility for han- 
dling Hindu-Moslem tensions 
over the proposed shrine at 
Ayodhya as well as the incipi- 
ent Insurgency in Moslem-dom- 
inated Kashmir. His appoint- 
ment is bound to raise 
apprehensions wi thin the mili- 
tant Hindu BJP party, an ally 
of the ruling National Front, 
but will be welcomed by Mos- 
lems. 

At the first meeting of the 
cabinet last night, it was 
decided to establish a commit- 
tee irnrinr the Finance Minister 
to control prices - particularly 


Israeli export 
agency reveals 
$37m deficit 

By Hugh Camegy 

AGBEXGO, Israel's monopoly 
ten produce export market- 
ing agency, has disclosed a 
deficit of 537m. (E24m), much 
of it owed by the country’s 
producers, and has called on 
the Government for help. 

The news emerged only days 
after Agrexco, which is 50 per 
cent owned by the state, 
signed a breakthrough agree- 
ment to sell 530m worth of 
fresh fruit and vegetables to 
Moscow in the first six months 
of next year. Officials hope the 
contract will lead to the open- 
ing up of a significant market 
for Israeli products in the 
Soviet Union. 

Agrexco officials insisted 
that the deficit posed no threat 
to its operations and that cash 
flow In the current season was 
stronger than last year. The 
agency has an annual turnover 
of about 5450m, handling vir- 
tually all Israel’s exports of 
fresh agricultural produce. 

The officials said the £37m 
deficit represented the posi- 
tion at the end of 1988, and the 
situation had not worsened 
this year. A large portion was 
attributed to the failure of 
Israeli marketing and produc- 
tion companies, which 
together , own the balance of 
Agrexco not held by the Gov- 
ernment, to repay loans from 
the agency. 


KiA/ " 


ANXIETIES are growing about an 
agreement between the Philippines 
and its foreign creditors on Its 
aiwinerrial debt. Bankers say it is 
premature to predict that the deal, 
struck in August between its leading 

banks and the government, will 
unraveL But prospects for its early 
implementation have been slowed by 
the sixth coup attempt against the 
G ov ern m ent of Sirs Corazon Aquino. 

The accord was hailed in August as 
the way forward for the internati onal 
debt strategy. Bankers, smarting 
from the political pressure which 
forced them to come, to agreement in 
principle with Mexico, held out the 
voluntary nature of the Philippines 
<t»ni as an example for the future. 

Even before the attempted coup. 


the agreement was running into diffi- 
culties. 

The idea had been that banka wish- 
ing to stay as lenders to Philippines 
would make new loans, perhaps of 
$lbn or more. A preliminary survey 
indicated that 5800m-S900m might 
easily be forthcoming. Those wishing 
to exit would tender their loans for 
cash in a buy back which would be 
financed largely by resources from 
the World Bank mid International 
Monetary Fund. 

With its bank debt of about $8bn 
accounting for a small proportion of 
its $28hn foreign debt, it would have 
been difficult for hank debt reduction 
alone to cover the country’s ffa«mrf«i 
needs. This was one reason for the 
greater on new ftan 


in the Mexican package, for example. 

A d gnlfiBint shor tfall In fhf expec- 
ted commitments for new loans now 
seems likely. This was in part 
because some large Japanese bank 
lenders, haying been expected to 
make new loans with the approval of 
their Ministry of Finance, in the-end 

opted for the debt buy-back. 

Banks have indicated willingness 
to make only about 5570m hi new 
loans. The books are not yet closed 
but the coup attempt, even if it falls, 
will not encourage uncommitted 
banks to put up new funds. If these 
funds axe not forthcoming, there is a 
danger that those banks which have 
indicated an Intention to make new 
loans will pull hack from the transac- 
tion. Even if they stay committed and 


tiie Philippines is content with the 
lower amount, there is then the ques- 
tion of the reaction of the IMF, under 
whose auspices the whole package 
has been put together. 

The other part of the deal, the debt 
buy-back for 50 cents has been less of 
a problem. The Government accepted 
tenders from 140 commercial banks 

to buy back |LS12bn of debt, after 
receiving tenders of 51A3hn from 156 
fiwMwiai institutions. 

The Government appears to have 
c o ncentr a ted on slimming down its 
bank lender group by about 90 banks, 
leaving about SO as longer-term lend- 
ers. Beyond that the basis for reject- 
ing other tenders seems to be taM 
clear, although loans to finance a 
unclear power project In the country 


have not been accepted. - 
Bonkers report differences in per- 
ception about what “volunteer 
To tiie banks,, it in SMM they 
are within rights to do nothing, 
while the Government would rather 
interpret it as indicating that there is 
freedom of choice .between tiie . two 
o p ti o ns . 

Si gnificant political effort from the 
tjs and Japanese governments is ulti- 
mately likely if the deal look* todan- 
ger of collapse- Without it, the Body 
SdtiaUve, launched in- March by the 
US Treasury Secretary, will have no 
non-American Jewel in its crown. 
Near-impasse is reported in negotia- 
tions betwe e n bankers and another 
non-American Brady candi- 
date - Morocco. 



h i Hone 


Vietnam looms again as boat people fail HK test 

Most immigrants are failin g to put up a convincing case against repatriation, writes Michael Murray 


Foreign Minister LK-GuJral 

of sensitive food items like 
sugar and edible oils - and to 
call an all-party conference on 
Sikh militancy in the Punjab 
and Kashmir. 

Among other prominent 
appointments, Mr fader Kumar 
Gujral, a former opposition 
spokesman on foreign affairs 
and ambassador to Moscow, 
becomes Foreign Minister. 

Mr Arun Nehru, a cousin of 
Mr fiandhi and a minister 
in his government, was given 
the Commerce Ministry and 
therefore responsibility for 
import export policy. 

Mr Devi Lai, deputy Prime 
Minister and a farmers’ lobby- 
ist, was put in charge of agri- 
culture. 

There had been concern that 
Mr George Fernandes, a former 
industry minister who had 
threatened to throw Pepsi-Cola 
out of India If- returned to 
power, would return to his old 
post He was made Minister of 
Railways. 

fa keeping the flpfannp minis- 
try for himself, Mr Singh 
remains in direct charge of ! 
inquiries into the Bobus scan- 
dal in which Mr Gandhi is 
implicated. 

• Mr Ranjan Wljeratne, the ! 
Sri Lankan Foreign Minister, 
left for Delhi yesterday on a 
goodwill mission, ft is believed 
the withdrawal of the Indian 
peace-keeping force from Sri 
Lanka will be high on the 
agenda. . 


A BOUT 90 per cent of 
Vietnamese boat people 
going through the 
Hong Kong Government’s 
screening process have so far 
failed to qualify for resettle- 
ment m third countries. Thus 
they face a forced return home 
under the pianu pd programme 
of mandatory repatriation. 

If this trend continues it will 
mean that over 37,000 of the 
44,000 Vietnamese who arrived 
after screening was introduced 
in June 1988 will be forcibly 
sent home. (Hong Kong's total 

Vietnamese population is 

57,000). 

The immigration department 
and the refugee status review 
board, to which the boat people 
may appeal, have so far dealt 
with cases Involving 7,000 and 
4JI00 people respectively. 

The Hong Kong Government 
and those involved in the pro- 
cess reject allegations from 
human rights groups that the 
boat people are not getting a 

fair hea rin g 

“It is never easy to listen to 
a man’s story and tell him he’s 
a liar,” comments Mr Francis 
Blackwell, a fanner Judge who 
chairs the review board. But he 
adds that having processed 
several Hwm«n«i cases he 
found dear patterns emerging 
and ft Is often p ossible to fell 
from the story which camp the 
appellant has been living in. 
Mr Blackwell dismisses criti- 
cisms from activists who daim 
the system is unfair and that 
there is government pressure 
to keep the number of success- 
ful appellants down. 

“Nobody has ever told me 
how many to screen in [recora- 



status. “Even at the factory 


More boat people queue at a Hong Kong centre to discover if they will be relocated overseas or sent back to Vietnam 


mend resettlement] and screen 
out [recommend repatriation], 1 * 
he s«id- The Government also 
points to the close Involvement 
of the United Nations High 
Commission for Refugees. The 
initial screening is carried out 
by fete Hong Kong immigration 
Department and the commis- 
sion bag unlimited access to aQ 
interviews and case files. 

The commission bag had to 
intervene in more than 30 
cases of people screened out, 
raising questions about how 
the sc reening is dona. One man 
rejected for refugee status was 


Israel bans leading Palestinian 


By Hugh Camegy in Jerusalem 

THE Israeli authorities yesterday banned Mr 
Faisal Husseini, the prominent Jerusalem Pales- 
tinian, from entering the West Bank and Gaza 
Strip, virtually identifying him as the most 
senior leader of the Palestinian uprising, or inti- 
fada, in the occupied territories. 

Army orders imposing the ban for six months 
from yesterday - three days before the sensitive 
second anniversary of the intifada's start 
- were delivered to Mr Husseini at his home on 
the Mount of Olives in east Jerusalem citing 
only public security as the reason. 

But detailed briefings prepared for reporters 
by military officials spelled out a list of accusa- 
tions against him intruding that he was active 
in coordinating the various Palestine Liberation 
Organisation and Islamic Fundamentalist fac- 
tions in the territories and establishing himself 
as the senior activist from Fatah, the main- 
stream PLO faction headed by Mr Yassir Arafat, 
the PLO leader. 

Mr Husseini, from one of Jerusalem’s most 
prominent Arab families with a long history of 
Palestinian nationalism, spent most of the first 
year of the intifada under detention without 
trial Since his release last January, he has 
assumed a leading public role as an advocate of 
the uprising and supporter of PLO policies for 
an independent Palestinian state in the West 
Bank and Gaza. 

He is widely regarded by foreign diplomats. 
Palestinians and Israeli moderates alike as a 
person who would play a central role, out front 
or behind the scenes, in any negotiated settle- 
ment with Israel. But Israeli right wingers - es- 
pecially Jewish settlers in the occupied territo- 
ries - have consistently pressured the 
Government to act against him as an instigator 
of intifada violence, once even distributing 
“wanted” posters carrying his picture. 

The military yesterday said he had been per- 
sonally involved in aiding anti-government 
actions, had initiated illegal protests such as the 


a Vietnamese who worked in 
Czechoslovakia as a guest- 
worker and became involved 
with the Charter 77 political 
protest movement. He was 
immediately arrested on his 
return to Vietnam. Yet the 
screening process rejected him 
as a political refugee. The com- 
mission intervened, and he will 
not now be sent home. 

So far 703 out of 7,165 boat 
people have been screened in, 
including those who have rela- 
tives abroad and qualify under 
the family reunification cate- 
gory. The 6,462 screened out as 


China renews 
criticism 


economic migrants gives a fail- 
ure rate of 90.2 per cent, which 
the authorities say is coinci- 
dental and not proof that there 
is a policy to admit only 10 per 
cent of applicants. 

Those screened out have 28 
days to go to Mr Blackwell’s 
review board and the vast 
majority take the o p p ort u nity 
to be represented, by legal con- 
sultants working under the 
auspices of the UN commis- 
sion. 

The board began Its hearings 
in June, replacing the 
unwieldy system where 


were reviewed by the governor 
sitting with the executive 
council. 

The board has heard 1,588 
cases involving 3,924 people, 
reflecting the large number of 
famiiiwH among the boat people 
in Hong Kong. The board has 
upheld the faitbii decision in 
1,491 cases involving 3,631 peo- 
ple. In 97 the decision has been 
ov e rt u rned, meaning that 293 
people, 7.5 per cent of appel- 
lants, have been screened in- 

Mr Blackwell says that polit- 
ical persecution is the most 
common reason to grant refa- 


Gadaffi to boost role of 


Of Hong Kong private sector in economy 




The mother, sister-in-law and nephew of Ahmed 
Slmkri, suspected of killing an Israeli man, sit 
by their wrecked home after it was blown up by 
foe Israeli army yesterday 

recent tax boycott by the West Bank town of 
Bett Sahour and had attempted to set up an 
independent Palestinian j udicial system in the 
territories. 

The ban on Mr Husseini did not include travel 
within Israel or overseas, which he has been 
allowed to do since his release from jafl. 


By John Elliott 
in Hong Kong 

CHINA HAS continued its 
four-month-old attacks on 
Hong Kong over the past two 
'days at a meeting in Hong 
Kcmg of the Sino-British Joint 
I.laison Group which is pre- 
paring for China’s resumption 
of sovereignty over the British 
colony in 1997, 

The attacks have been more 
muted than at foe last meeting 
of tiie group In London two 
months ago, when the two 
countries met formally for the 
first time after the June crack- 
down In Peking. UK officials 
hope that some practical work 
on details of tiie 1997 hand- 
over will be resumed before 
tiie session aids tomorrow. 

During the past two days, 
China’s representatives have 
repeated accusations that 
Hong Kong had become a cen- 
tre for subversives who want 
to bring down Ming’s Com- 
munist regime. 

They also allege that the UK 
and Hong Kong are trying to 
"hi ta mutimifllim " the colony’s 
future. They repeated com- 
plaints about plans for a recla- 
mation and redevelopment 
scheme near the colony’s cen- 
tral area, which will mean 1 
dosing part of a British naval ! 
base. They want tiie base left 
for their own possible use 
after 1997. 


AFTER years of rigid state 
control, Libya is encouraging 
private business so long as it 
follows Colonel Muammer 
Gadaffi’ s ruling that workers 
are partners and not slaves. 
Renter reports from Tripoli. 

- “The intention is to expand 
gradually the role of individu- 
als and co-operatives in the 
economy,” a confidential offi- 
cial document says. 

It indicates the authorities 
will not allow private busi- 
nesses to grow into capitalist- 
style companies where the 
workers receive wages and the 
owners reap the profits. 

But foreign economists say 
the proposed measures would 
boost the private sector and 
follows encouraging early 
results of an economic liberal- 
isation programme launched in 
198a 

The Government plans to cut 
its budget deficit by phasing 
out all subsidies on foodstuffs 
such as wheat, flour, sugar, tea 
and salt However, controls on 
prices and exchange and inter- 
est rates will not be eased in 
the near future, the document 

After years of strict control 
of all businesses except small 
terms and private artisans, tiie 
Government last year allowed 

S rivate shops to reopen and 
egan to encourage small 
enterprises in the services and 
manufacturing sectors. 


Ownership of some state- 
owned factories has been trans- 
ferred to the employees under 
the “partners, not wage slaves^ 
scheme. Libya depends heavily 

recent *y ears have bit econ- 

omy. 

The document, a rare insight 
into government economic 
planning, says: “These initia- 
tives should be considered foe 
start of a gradual process that 
will be deepened and developed 
in the light of evolving circum- 
stances.” 

The only workers in private 
companies must be family 
members of company partners, 
according to GadaSTs theories. 
In practice, partnerships often 
employ foreigners Illegally. 

The next stage of the liberal- 
isation will come when the 
Government allows private 
companies and partnerships to 
import directly most types of 


“Eventually public and pri- 
vate entities wul share import 
activities equally,” the docu- 
ment says. The public sector 
dominates at the moment 
TO stim u la te the private sec- 
tor and ease balance of pay- 
ments pressures, foreign con- 
sultants have urged the 
Government to devalue the 
dinar to boost exports, raise 
interest rates to encourage 
savings end fixing retail 
prices. 


level they might have dis- 
agreed with the policy and 
been suddenly categorised as 
oppo sed to foe Government,* 
he said. “life can then become 
distinctly unpleasant,? 

However, in general Mr 
Blackwell says that he finds 
the appellants are seeking a 
better life outside Vietnam and . 
not feeing persecution. 

Despite International opposi- 
tion, the Hong Kong Govern- 
ment insists this is foe logical 
outcome of the screening pol- 
icy, which was first introduced 
on June 16 1988, when the flood 
of arriving boat people some- 
times reached 1,000 a day. Pre- 
viously boatpeopls were auto- 
matically classified as 
refugees, which allowed them 
to stay In Hong Kong camps 
pending re se t tl e me nt in third 
countries. 

The Hong Kong administra- 
tion has a big logistics problem 
in transporting bade to Viet- 
nam those who have been 
screened out, and g o v ernment 
representatives are searching 
for sultahle ships or aircraft to 

charter. 

The Government faces large 
backlogs both in screening the 
boat people to decide who goes 
home ana in transporting them 
once the decision Is made. The 
review board has a target of 
hearing cases involving 400 
people each week but even if 
tills is met It could take two 
years to Complete the task, 
even if there is no new influx 
of boat people next spring as 
favourable winds again blow 
from the coast.nl Vietnam 
towards Bong. . . 


Tokyo to give 
$35m fending 
to Peking 

JAPA N has given Chi na a 
grant cf 535m, its first govern- 
ment aid to Peking since rela- 
tions were soured by a military 
crackdown in June, Reuter 
reports fr om Peking. 

A Japanese embassy official 
said yesterday that the two 
rides had agreed on the gift 
last year and Japan’s suspen- 
sion of new funding to China 
remained m^hanpH i 

Western nations and Japan 
froze government lending and 
aid to Peking after China's 
army crushed a student-led 
campaign for democracy in 
June, killing hundreds and 
possQdy thousands of people. 

The grant was originally 
planned for May or June tins 
yea; and was postponed 
because of the unrest in China. 

China’s official press h fl M 
the gift as a step toward restor- 
ing ties between the two coun- 
tries. 

Peking is keen to hire baric 
Western loans and aid money, 
badly needed to pay for mod- 
ernisation at a time when the 
country Is strapped for cash. 

The Japanese official said 
Tokyo wanted Western nations 
to improve their ties with 
Peking and opposed interna- 
tional policies that would iso- 
late China. 

“W e do not thtnfc that this 
grant will cause problems in 
our relations with Western 
countries,” he said. 


‘Outlaw’ Aoun’s refusal to go paralyses Lebanese peace process 

All parties involved agree Christian general is the problem, but none appears to have the means to get rid of him^ writes Lara Marlowe 


T HE Arab League's special 
committee on Lebanon 
which met in Riyadh at the 
weekend concluded that “the rejec- 
tion by General Michel Aoun of the 
Taif agreement and his refusal to 
recognise the legitimacy of the new 
Lebanese Government constitute 
the main obstacle to national under- 
standing as well as the principal 
reason for the dangerous military 
escalation in Lebanon”. 

The committee was referring to 
the agreement, reached by Lebanese 
MPs in the Saudi town of Taif. on 
an Arab League plan which gives 
more constitutional power to Mos- 
lems and provides for a partial Syr- 
ian withdrawal 

Yet 12 days after the election of 
Elias Hrawi as Lebanon's 10th presi- 
dent and the formation of his 
“national reconciliation govern- 
ment”, neither foe Arab League, 
President Hrawi, Syria, France, the 
US nor the Soviet Union has found 
the means to overcome Gen Aoun. 

President Hrawl's announcement 
Halt be was ready to use military 


force to evict Gen Aoun from the 
presidential palace at Baabda pre- 
ceded a Syrian military build-up in 
Lebanon that sent diplomats scurry- 
ing and caused consternation in the 
corridors of Baabda. The threat and 
the muscle flexing have not yet led 
to what Gen Aoun predicted would 
be “the final battle”. 

President Hrawi has given two 
justifications for his failure to evict 
Gen Aoun in his specified time 
frame: “deference to diplomatic 
efforts” and the continued encamp- 
ment of several thousand "innocent 
people around the former Lebanese 
army commander”. 

Little matter that the “human 
shield” which deterred the attack 
has come to resemble a permanent 
county fair, complete with tents, 
acrobats and vendors of doughnuts, 
plastic Lebanese flags, sandwiches 
and coffee. 

But the real reason for President 
Hrawi’s restraint has been more 
firmly rooted in the reality of Leba- 
non. Mr Hrawi had counted on Leb- 
anese army troops serving under 


Gen Aoun to rally to General BmPe 
Lahoud, the new commander in 
chief he appointed on November 28. 
After the Christian units of the Leb- 
anese army failed to Recognise Pres- 
ident Hrawi’s legitimacy, tiie Maro- 
nite Christian president could not 
enlist the assistance of a foreign 
power - regarded as an enemy by 
man y Lebanese Christians — to 
attack the very people whose loy- 
alty he so needs to win. To take the 
Christian enclave by force would 
mean an Interminable Inter-Chris- 
tian war within Lebanon’s larger 
Moslem-Christian conflict It would 
undermine President Hrawi’s rfaim 
to represent his follow Christian 
Lebanese as wen as pro-Syrian Mos- 
lems. 

The US and the Soviet Union 
want to help President Hrawi, but 
like Mr Georges Saadeh, the leader 
of the Christian Phalange party, 
they supported the Taif agreement 
“as a peace agreement and not as 
the prelude to another war”. 

“We want no more dead hi Leba- 
non. We are in complete agreement 


on that” US President George Bush 
said after his discussions with 
Soviet President Mifchafl Gorbachev 
off Malta. 

Furthermore, the US, like the 
Soviet Union, knew that Gen Aoun 
would respond to a military offen- 
sive by shelling tiie Moslem popula- 
tion of West Beirut. Their joint 
approval of such an action would be 
condemned by foe Vatican, Israel 
and France, which in August sent 
nine warships to the eastern Medi- 
terranean to prevent the crossing of 
the “red line” in August 

The Syrians have in effect been 
paralysed by Gen Aoun's continued 
rejection of the Taif process. They 
cannot attack Gen Aoun without a 
request from President Hrawi, who 
cannot ask thum, and against the 
will of the superpowers, who cannot 
hack them. 

Yet Damascus holds the ultimate 
trump card: if foreign powers will 
not dislodge Gen Aoun, more blood- 
letting is likely to follow. 

But the paralysis has also 
affected Gen Aoun. He has not 


gained an inch of territory and can 
offer his supporters only intermina- 
ble general strikes, economic decay 
and encirclement. Gen Aoun sought 
international support for bis cause. 
But in the end it took an Algerian 
Moslem diplomat to stop the artil- 
lery bombardments that Gen Aoun 
brought upon the Christian enclave. 

The international community 
turned a deaf ear to Gen Aoun and 
supported first President Bene Moa- 
wad and then his successor and the 
Christian area of the Lebanon is too 
small, too vulnerable, to exist as a 
separate country, even if Gen Aoun 
dared to betray his stated aims and 
beg for the partition of Lebanon. 


ccordmg to the pro-Syrian 
Lebanese newspaper As 


A 


J Safir, the US ambassador to 
Damascus. Mr Edward Djerejlan, 
told President Hrawi’s envoys that 
the US would intervene through a 
third party to obtain Gen Aoun’s 
departure. 

It is difficult to see who but the 
French could intervene in such a 


manner. Mohammed Hussein Fad- 
lallah, the spiritual leader of the 
pro-Iranian Hlzboflah, may, in a cer- 
tain sense, have been accurate 
when earlier this week he mIM 
France “the agent of the US in Leb- 
anon”. 

The French Government has 
another problem. The Lebanese 
Maronite lobby is fashionable in 
Paris. Opinion polls show that a 
h igh e r percentage of French than of 
Lebanese Christians support Gen 
Aoun. While President Mitterrand’s 
Socialist government ostensibly 
supp orts the Taif agreement and 
President Hrawi, pr ess u re at home 
cannot be discounted. 

However, the French Government 
could be the instrument of Gen 
Aoun’s departure. Mr Rend Ala, the 
French ambassador to Lebanon, is 
reported to have told a senior Leb- 
anese official in East Beirut that t fop 
French Government would invite 
Gen Aoun to Paris until a timetable 
for a Syrian withdrawal from Leba- 
non could be established. 

It is also said in Beirut that the 


French might seek a UN Security 
Council resolution on the sover- 
eignty of Lebanon and the with- 
drawal of all fbrmgn forces from the 
country. Such a resolution would 
allow Gen Aoun to say he bad at 
least obtained recognition of his 
demands. 

In the meantime, Lebanon 
remains a virtual time bomb. Presi- 
dent Hrawi said yesterday that he 
would give Gen Awn* two weeks to 
leave Baabda and threatened to 

resign if he feflfid to shift him. This 
app ears to confirm reports that 
President Hrawi had' received assur- 
ances from foreign diplomats that 
foeir governments would obtain. 
Gen Aoun’s departure. - * 

But Gen Aoun has more than 
once risen from near If he 

d oes not create his . own political 
party, accept an ambassadorship or 
a government advisory post - as. 
many foreign diplomats hope — ■ ha 
foay continue, as Prime Minister 
Seam el Hoss says, “an outlaw. 
le ^nng a mutiny that will result 
only fo partitioning Lebanon - . 




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FINANCIAL TIMES THURSDAY DECEMBER 7 


WORLD TRADE NEWS 


CoCom rocked by the crumbling wall 


Mannesman!! 


V/W/V11J. 1 V V1VVU L/Jf L11V va ^ O T T ^ 

West’s curbs on technology can’t keep pace with changing world, writes David White 

T”1 OUR DAYS a week, fundamental relaxation. That KGB is omnipresent broad spectrum. The US has ultra-quiet submarine propel 


F OUR DAYS a week, 
year-round except for 
holidays, in an annexe 
of the US embassy in Palis, 
works an organisation that 
does not exist 

• Every now and then, at an 
important meeting, it floats 
into the public awareness and 
then out again. The Co-ordinat- 
ing Committee on Multilateral 
Export Controls (CoCom) is a 
sub-group to a more senior 
body that was never set up. It 
has a small secretariat; 2? 
countries maintain permanent 
delegates. But it is not recog- 
nised, records of its discussions 
are not published, and it has 
no formal tie to the North 
Atlantic Treaty Organisation, 
although it was set up at the 
same time in 1949 and has 
mostly the same members. 

The work of this spectral 
body is like painting the Forth 
Bridge. Reviewing the cata- 
logue of products and technolo- 
gies deemed to be of military 
significance and therefore 
unsuitable for communist cli- 
ents takes four years to get 
through. It cover s munitions, 
atomic energy and, most debat- 
able and most time-consuming, 
civilian industrial products 
with military uses. 

CoCom decided some years 
ago to break the list down into 
four groups, each with a mix of 
different items, balanced 
according to volume and the 
difficulties that were expected 
to arise. The cycle has been 
completed once and Group A 
has come back on the second 
round, and so it is set to go on, 
except that the world the sys- 
tem was created for has dra- 
matically altered. 

Do the West's security con- 
trols on civilian exports make 
sense now that walls between 
Eastern and Western Europe 
are crumbling? Row can West 
German companies work to 
modernise East German indus- 
try with limit s an what they 
take with them? How can a 
country such as Hungary flmj 
a place In the technology race? 

A high-level Cocom meeting 
in October decided further 
work was needed before any 


fundamental relaxation. That 
was before the changes in East 
Germany and Czechoslovakia. 

Pressure had already been 
brought to make exceptions for 
Poland and Hungary, in the 
same way that CoCom did in 
1985 for China, with a differen- 
tial set of rules. Can the US 
and its aIUpb continue to treat 
the Warsaw Pact as a bloc, 
while encouraging Eastern 
European countries to loosen 
their dependence on Moscow? 
And whore should the dividing 1 
line now be drawn? 

Pressure has also been 
■mounting to trim the Hst of 
controlled items right back: 
fewer barriers, but high e r, to 
prevent circumvention. Preci- 
sion manhine tools have been 
at the centre of this debate, 
with Bonn campaigning hard 
for changes, but CoCom has 
yet to resolve the issue. 

British officials argue that 
GoCom pursues strategic, not 
economic, Interests, and that 
there is no strategic rationale 
for differential treatment The 
Warsaw Pact rema i n s in place, 
this argument goes, ana the 


KGB is omnipresent 

Some fear that differentia- 
tion would only compound the 
bureaucratic complexity. The 
UK is among those favouring a 
shorter list more enforceable 
and more credible to industry, 
which would like to see fewer 
regulations, evenly Imple- 
mented. But cutting items Is 
not simple, either. It requires 
the same effort of strategic 
assessment as would including 

new items. 

A recent report by a commit- 
tee of the Western European 
Union’s parliamentary assem- 
bly said Cocom was "fast 
appearing to be a relic of the 
Cold War policy". President 
Mikhail Gorbachev argued in 
July that scientific and techni- 
cal links were being “bled dry” 
by Cocom restrictions and 
many rules were “absurd". 

Western defence ministries 
will continue to militate 
strongly for limits in technol- 
ogy areas which they see hav- 
ing military applications. But 
opinions across the 17 - all of 
Nato except Iceland, plus 
Japan and Australia - cover a 


broad spectrum. The US has 
held down the conservative 
and, with Japan and the UK 
not for away. They maintain 
that that the restricted technol- 
ogies are not, in the main, the 
ones Eastern countries most 
need to stimulate their civilian 
economies. 

The US, most recently 
through Mr Lawrence Eagle- 
burger, deputy Secretary of 
State, has signalled Its willing- 
ness to “respond construc- 
tively" to political changes. 
But how far is it ready to go? It 
used the October high-level 
meeting to show domestic 
opinion - and US compa- 
nies - its determination to 
stand up to wayward allies. 

This followed allegations 
against Olivetti of Italy - de- 
nied by the company - that It 
violated CoCom rules by 
upgrading hardware and soft- 
ware in the Soviet Union. The 
case echoed a previous affair 
involving Toshiba of Japan and 
Kangsberg of Norway, which 
were accused of supplying ban- 
ned milling machines that 
enabled the Soviets to make 


Where the West draws the line 


THE Soviet Union has enough 
data-processlng capacity to 
mount a manned space. pro- 
gramme. But the West still 
tries to preve n t it obtaining 
some personal computers. 
Why? 

Last year, the threshold for 
computers allowed to pass 
unhindered to Warsaw Pact 
countries was raised to include 
16-hit models. This was mainly 
because they could be bought 
anyway from places outside 

CoCom controls. 

But a line Is still drawn at 
top-of-the-range 32-bit 
computers which in the West 
you might commonly find 
in a company accountant's 
office. 

Can this technology be kept 
within walls? Can the West 
stop people smuggling out 
pocketfuls of silicon chips? 
The answer is no, but the mili- 


tary concern of the US and its 
allies Is to hinder development 
of production capacities in the 
Warsaw Pact which would 
facilitate weapon programmes 
through computer-aided 
work-stations. 

Computers are what keeps 
Cocom most busy. The rules 
are complex. Some equipment 
is passed containing compo- 
nents that are controlled, on 
the calculation that nobody 
would buy a computer to can- 
nibalise a chip or medical 
diagnosis equipment to take 
out the computer. 

Equipment up to some IBM 
PC/AT-compatibles Is now 
releasable. But Western intel- 
ligence services believe they 
may have achieved a “holding 
point": the 80388 chip used in 
the higher-range IBM comput- 
ers is produced only by Intel of 
the US. 


The Soviets and their allies, 
they say, have produced only 
small quantities of computers 
compatible with IBM PCs. 
Indigenous components are six 
to eight years behind. 

The lag is reckoned to be 
almost as long in minicompu- 
ters, longer in IBM-based 
mainframes, and 12-15 years 
in super minis and high-perfor- 
mance peripherals such as disc 
drives. 

The c ompu t e r relied on to 
design projects such as the 
MiG-29 Fulcrum fighter is 25 
years old. Called the BESM-6, 
this workhorse of Soviet 
research and development is 
“extremely slow", with about 
0.2 per cent of the processing 
power of the archetypal West- 
ern CRAY supercomputer. Its 
intended replacement Is 
believed to have run into prob- 
lems. 


ultra-quiet submarine propel- 
lers. The US says the technol- 
ogy cost Moscow 525m, but 
that it will cost the Pentagon 
many times more to regain its 
capability for detecting Soviet 
submarines. 

Since it has no offi ci a l sta- 
tus, CaCom has no direct 
enforcement power. Each coun- 
try applies the rules in its own 
way, under its own legislation. 
In the UK this is the Export of 
Goods (Control) Order - the 
Department of Trade and 
Industry’s responsibility. 
CoCom is now trying to har- 
monise enforcement, while 
simultaneously phasing out 
controls on trade in these 
items between Its members. 

“General exceptions'* allow 
the rules to bend. For fai Rtowy . 
in the UK. a company will 
apply to the DTI to export 
something on the list The DTI 
consults the Ministry of 
Defence and the Foreign Office 
and they may pass it Britain 
then puts it to Cocom. Unanim- 
ity is required to get it 
through, but absentees are 
deemed to approve. 

The US stopped “general 
exceptions” to the Soviet 
Union in 1979 in response to 
the Invasion of Afghan- 
istan - and was criticised for 
using CoCom as a political 
vehicle. It lifted the veto this 
simmer. 

CoCom’s fists are secret but 
each member publishes its 
own, ran g in g from arms to cer- 
tain kinds of ball bearings, 
from robots to specialised 
metal alloys. 

It is argued that the net Is 
never 100 per cent effec- 
tive — and requires loosening 
when technology becomes eas- 
ily available from alternative 
third-country suppliers in Asia 
- but succeeds in slowing 
down advances in Soviet mili- 
tary technology end making it 
more expensive. 

CoCom’s more cautious 
members say it must steer 
clear of political gestures. But 
It is inevitable that both the 
scope of controls and CoCom 
itself will come increasingly 
into question. 


group wins 

telephone 

concession 


By Hugo Dixon 


Airbus component 
order awarded to 
Indonesia’s IPTN 


THE West German 

Government plans to 

announce this morning that a 
licence to operate the 
country’s second mobile phone 
network has been granted to 
an international consortium 
led by mrihi p muriiw, the 
German engineering group. 

The new licence, which, will 
put the Mannesman!* 
consortium In competition 
with the state-run Deutsche 
Bnndespost Telekom, is one of 
the most valuable concessions 
ever awarded by a government 
to the private sector. 

Analysts estimate that It 
could have fetched up to 5I0bn 
if auctioned to the highest 
bidder. 

The Mannesmaim group, 
called Mannesmann 
Mobilfunh, has won the 
coveted licence following a 
contest with nine other 
consortia comprising about a 
hundred companies from 
across the world. 

The other members of 

Ma^wwananii MnWlfnmlc are: 

Pacific Telesls, one of the 
US “Baby Bell” telephone 


By John Murray Brown in Jakarta 

IPTN. Indonesia's state supported 

jKjmsnaefi mmnsnv. has woo a keep the aircrafts residual 


companies; Cable and 
Wireless, the international 


Developed countries grapple with textile competition 


By Alice Rawsthom 


THE textile industries in North 
America,- Japan and Western 
Europe are experiencing a 
period of consolidation, in 
which companies are restruct- 
uring to cope with the more 
competitive climate in the 
international marketplace. 

An Economist Intelligence 
Unit study says textile compa- 
nies in Japan and the West are 
increasingly involved in the 
specialist product sectors, 
which demand higher stan- 
dards of quality and service. 

Most of the developed econo- 


mies have seen buoyant con- 
sumer spending in recent 
years. The pace of growth has 
slowed in the US and some 
Western European countries - 
such as the UK - sinew the 
miricTlp of. last year. 

But spending is still rising in 
most European economies. 
And the Japanese clothing 
market has been expanding 
rapidly for two years. 

The textile companies have 
used these favourable eco- 
nomic conditions, according to 
the EIU, to prepare to cope 


with increased competition In 
the global market 
The study identifies three 
trends that characterise the 
industries in the developed 
economies: 

• Upgrading output towards 
value-added products; 

• Diversifying into a greater 
variety of product types and 
styles to meet consumer 
demand; 

• Using smaller, more versa- 
tile production units. 

These trends have emerged 
in an environment where the 


cost of labour has become less 
important in dete rmining com- 
petitiveness, given that other 
factors — such as service and 
product quality - have 
become more significant 

Most of the big textile com- 
panies have continued to shed 
labour because at the need to 
improve productivity. The tex- 
tile workforce in Western 
Europe has been reduced, 
although the level of employ- 
ment has remained stable in 
the US. 

Moreover, as the industry 


prepares for the phasing-out of 
the Multi-Fibre Arrangement, 
the bilateral agreement that 
regulates th e w orld trade in 
textiles, the EIU says there is 
evidence that the increase in 
textile and clothing imports 
into some developed economies 
from emerging industries in 
Asia is slowing down. . . 

Textile and Gotfttng Trends 
in North America, Japan and 
Western Europe, published in 
Textile Outlook International 
from EIU, 40 Duke Street, Lon- 
don, WlA lDWfor £75. 


telecommunications group 
baaed in Britain; Lyoxmaise 
des Eaux, the French water 
company; Deutsche 

Genossenschaftsbank, a 

private German bank; and 
Treninmderiscbe Reserve. 

The award win be a severe 
ffiR^ pp niiitmmt to members of 
rival consortia. Four of these 
are from the UK: British 
Telecom, Racal Telecom, STC 
and Securicor. 

The new licence wOl give 
Mannesmann Mobllfnnk the 
right to set up a cellular 
system In West Germany 
conforming to the latest 
computerised technology from 
1991. 

This system will link into 
the pan-European mobile 
network, planned to start at 
the same time, which will 
allow people to drive across 
file continent using the same 
handsets. 

There has been tremendous 
excitement over the award of 
the second German licence 
because of the explosion in 
demand for mobile phones 
elsewhere in the world, 
especially in the UK and US. 
Germany has lagged behind 
these developments, but is 
regarded as an extremely 
attractive market because of 
the size of its population and 
its wealth. 

, Dr Christian Schwarz 
-Schilling, Germany's 
telecommunications minister, 
plans to announce Us decision 
at 9 am. This follows a 
meeting of the West German 
cabinet yesterday. 


IPTN, Indonesia's state 
aerospace company, Ijas woo a 
component supply contract, 
which officials say is worth 
3100m, with Airbus Industrie, 
the Toulouse-based European 
consortium. 

The contract, to make cock- 
pits, and other airframe 
parte. Is understood to be an 
offset deal, part of a sales 
agreement in November 

under which Garuda, Indon- 
esia’s national airline, will 
acquire nine A*330s at an esti- 
mated cost of tfhu. Indonesia 
recently unveiled plans to 
spend $3.6bn re-equipping its 
national fleet, to postion itself 
for the projected increase in 
Asia Pacific air traffic. 

However. Mr BJ. Habibie, 
the head of IPTN, insists on a 
large offset component in any 
purchase made by Garuda or 
the armed forces, in . a bid to 
raise company revenues and 
Increase technological 
know-how. IPTN has subcon- 
tract deals with Boeing and 
General Dynamics at the US, 
and last month agreed its first 
aeroengine collaboration with 
Bolls Boyce of the UK 

Yesterday there was still 
uncertainty over bow the Air- 
bus deal is to be financed. 
Garuda is said to favour a 
direct balance sheet purchase 


value on the company^ books. 
For offshore financing Garuda, 
ffite afi state owned companies, 
would need government 
approval. 

The Finance Ministry prefers 
an operational lease so . as not 
to add to Indonesia's official 
debt, a heady 3401m. Garud a 
baa an agreement with Interna- 
tional Lease Finance of Calif- 
ornia for eight Boeing 737-SOOa. 

In August Garuda signed a 
further leasing deal with a con- 
sortium led by Shan no n - based 
Guiness Peat Aviation. The 
deal included Aerowisata, a 
wholly owned subsidiary of 
Garuda, and Blmawtara, a com- 
pany part-owned by a son of 
president Suharto. 

• .Canada is providing 
US$78m in loans and conces- 
sionary financing for construc- 
tion of a 250 tonnes daily 
unbleached pulp mill for Panja- 
pel Pulp Industry in Thailand, 
Robert Gibbons reports from 

Mn ntawit 

Kfoecfcner Startler Hurter of 
Montreal, the pulp and paper 
engineering arm of West Ger- 
many’s Ktoectot er group , is 
Hoaigntng and supervising con- 
struction of the mill. Output 
win go to a linerboard plant 
nearby. 


Philips plans HDTV 
tubes plant in US 


By Laura Raun in Amsterdam 


philip s, the Dutch electronics 
giant , is planning to build a 
3100m plant in the US where 
colour TV picture tnbes and 
components for high-definition 
TV (HDTV) will be made. 

Initially more than 800 new 
jobs will be created with the 
plant's construction 

The plant represents Philips’ 
most concrete effort yet to pro- 
mote the European standard 
| for HDTV in the US, which 
could account for 25 per cent of 
the $40bn world market fore- 
cast in 2010 by soma industry 
experts. Europe and Japan 
have developed rival standards 
and want the US, which has 
lagged in the race, to adopt one 
of theirs. 

Philips argues that the stan- 
dard it has agreed with Bosch 
at West Germany, Thomson of 
France and Nokia of Finland is 
better because it ban be 
received by both conventional 
and HDTV sets. A world stan- 
dard is supposed to be derided 
next year by the International 
Radio Consultative Committee 
(CCIR). 


HDTV provides -a much 
sharper picture than conven- 
tional TV and is. -expected to 
have widespread applications 
in computers, semiconductors, 
consumer electronics and 
defence, hi the post Philips has 
applied for US Government aid 
to promote HDTV technologies 
bid no decision has been made. 

The new plant is to be built 
through Philips Display Com- 
ponents, a division, of. North 
American Philips, In two 
phases, the first designed to 
make 1m 2Mnch standard and 
high-grade colour picture tubes 
a year. The second phase is 
intended to produce tubes far 
upscale HDTV models. 

The first, phase is supposed 
to be finished within IS 
mnnths from groundbreaking. 
No derision has yet been made 
about , a deadline fee foe second 
phase although Twtft combined 
wffl encompass 800,000 square 
feet ; - 

Philips is consuming several 
sites in Tennessee. Kentucky. 
Obto and Michigan with a deci- 
sion expeciedsoon. 


AMERICAN NEWS 


Bomb kills 50 as 


Bogota anti-drugs 
war intensifies 


Dan Quayle 
plays the 
tough guy 


Poisoned chalice of Brazilian presidency 


Given the state of the economy, Lula may be better off losing, writes Ivo Dawnay 


By Lionel Barber 


By Sarita Kendall In Bogota 


AT LEAST 50 people are 
thought to have been killed In 
a powerful truck bomb which 
shattered buildings for several 
blocks around the security 
police (DAS) headquarters in 
Bogota. The bomb exploded 
early yesterday morning, leav- 
ing a 30 foot deep crater out- 
side the DAS offices. 

The attack is one of the moat 
significant against the Colom- 
bian authorities in three and a 
half months of the war with 
drug barons. 

One side of the 10-storey 
building was blown away and 
the interior collapsed into a 
mass of rubble and twisted 
metal. Twenty blocks away, 
broken glass covered the pave- 
ments. Over 100 people are 
reported seriously injured and 
many more wounded. 

General Miguel Maza. the 
head of DAS. was unhurt, 
apparently because the walls of 
his office had been especially 
strengthened. The general, 
who escaped a car bomb by 
seconds earlier this year, led a 
series of investigations into 
drug trafficking groups and 


established links between for- 
eign mercenaries and cocaine 
traffickers. 

The director of Colombia’s 
Civial Aviation Department 
has also confirmed that a bomb 
exploded In the passenger 
cabin of Avianca’s Bogota-Cali 
flight on November 27. The 
jet's fuel tanks apparently 
caught fire and the aircraft dis- 
integrated and crashed near 
Bogota, killing 111 people. 

Several rumours about the 
motive for the bomb are circu- 
lating: one is that traffickers 
were aiming for two cabinet 
ministers who changed plans 
at the last minute and did not 
take the flight; another specu- 
lated that the Medellin cocaine 
cartel was after five informants 
on the aircraft. 

This has been a critical week 
In the government’s anti-drug 
war. Congressional representa- 
tives belon g in g to the govern- 
ing Liberal party openly defied 
the interior minister by trying 
to push through a resolution to 
include extradition for drug 
traffickers in a national refer- 
endum. 


Mulford forecasts $35bn 
fall in US trade deficit 


VICE President Dan Quayle 
continues to cultivate his 
Image as the conservative 
alter ego of President George 
Bush in dealings with the 
Soviet Union. 

Two days after the Malta 
summit, Mr Quayle said in an 
interview that he saw “little 
change” in Soviet foreign pol- 
icy. The US, he said, was deal- 
ing with a “totalitarian gov- 
ernment" which wants to 
“create instability” In areas 
such as Central America. 

The White House has issued 
a ritual denial that the Presi- 
dent and Vice President were 
at odds over US-Soviet rela- 1 
tfons. In fact, most observers | 
believe Hw difference in tone 
is deliberate. I 

Yesterday, Mr Gennady Gear- 1 
asimov, the Soviet Foreign 
Ministry spokesman, urged Mr 
Quayle to sense the realities of 
life and the new demands of 
the times. 

As Mr Bush edges towards a 
more co-operative relati onship 
with Moscow it suits him to 
have Mr Quayle play the role 
of sceptic because it prot e c ts 
his conservative base (which 
has always had Its suspicions 
about the consensus-seeking 

President). 

As for Mr Quayle, he has 
spent his first year in office 
trying to shed the lightweight 
Image which he displayed dur- 
ing the 1988 election cam- 


T HE WORST thing that 
could happen to Mr Luis 
Tnacia “Lula” da Silva 
on December 17, after an 
extremely successful presiden- 
tial campaign, is actually to be 
elected as Brazil’s new head of 
state. 

That, at least, is the view of 
some of the socialist candi- 
date’s supporters, now looking 
past the ballot on December 17 
to a deeply troubling economic 
outlook. 

ff the polls and the fliumriwl 
markets are to be believed, 
however, his supporters need 
not be too concerned about his 
prospects. 

According to most public 
opinion soundings, Mr Fer- 
nando Collar de Mello, the cen- 
tre-right front runner, is a com- 
fortable 12 points ahead 
And were the gap closing 
significantly, the howl would 
soon be heard in Brazil's 
hair-trigger markets where the 
bellwether “black" dollar has 
recently even drifted back 
somewhat, to a margin of 
about 100 per cent on the offi- 
cial exchange rate. 

“Lula", as be is commonly 
known, may well narrow the 
gap. His portrayal of bis rival 
as a contimiisla - the natural 
heir to the oligarchy headed by 
outgoing President Jose Sar- 
ney - is gaining a following 
among the 30-odd per cent of 




Collar, left, and ‘Lida’: Don Quixote and Sancho Patna? 


the 82m-strong electorate con- 
sidered by pundits to be aUve 
to such nuances. 

But, as Dr Walder de Goes, a 
sardonic Brasilia political sci- 
entist, points out: “The unin- 
formed poor don't want one of 
their own as president- They 
want someone rich and beauti- 
ful- " A valiant, preferably nar- 
row, defeat will ensure a huge 
leap in Lula’s prestige in the 
Congress and a leading role in 
opposition. 

Rich and beautiful he may 
be, but for Mr Collar what will 
be more useful are the luck 
and skQl that have already got 
him within days of the top job 
in the world’s third-Iargest 
democracy. The short-term out- 


look is daunting, indeed. 

For the same stormy politi- 
cal landscape that will be so 
promising for his rival In oppo- 
sition, looks like a potential 
Somme battlefield for a new 
president with fewer than 20 
declared s u pp o r t ers in the 526- 
member legislature. 

Optimists point out that on 
Mr Conor’s side will be the 
moral weight of some 40m 
votes, a short honeymoon of 
goodwill and, most important, 
the patronage of 30.000 jobs to 
dangle before the country's 
notoriously venal politicians. 
Pessimists counter, however, 
that this is inadequate cement 
to stiffen the marshmallow 
backbones In Congress for the 


measures needed to confront 
an Inflation rate forecast at' 
wen over 50 per cent a month. 

To reduce a budget deficit of, 
at the very feast, 8 per coot of 
gross domestic product in oper- 
ational terms, the new presi- 
dent will have to increase tax 
receipts, - slash already 
stripped-down budgets, rush 
through privatisation mea- 
sures and dismiss civil ser- 
vants by the thousand. - 

Much of this will require . 
amendments to the'Alice-in- 
W onderland constitution 
proudly approved by the very 
ramp congressmen only .little . 
more than a year ago — a pro- 
cess that needs three-fifths 
support. 

Some, like the wily formar 
Planning Minister, Senator 
Roberto Campos, believe that 
the right's new champion 
already exhibited the political 
deftness needed to pull this off 
if only it coincides with an eco- 
nomic crisis of suitably apoca- 
lyptic dimensions. 

At the moment, the senator 
is biding his time, “I do not 
think we have really yet 
reached the rathai-gju neces- 
sary to turn the thing round,” ' 
he said this week. What is cer- 
tain is that the new president 
will have only a few weeks to 
try, before Congress flinghw* at 
the thought of alienating its 
electorate just mo nth* before 


another priL 

In that case, he will have 
only two options: to attempt to 
use referenda to press Ms strat- 
egy or to create a genuine 
national party to fight fin: his 
programme at the ballot box. 
There is little time far either. 

.While not ruling out a mirth 
de, the soe|#lc&l Dr de Goes 
believes the expectations of the 
Brazilian wumaa^ are too high 
to be met The Hkely conse- 
quence of an Impasse between 
legislature and executive will 
be the bringing forward from 
1993 to 1991 of an already 
scheduled national plebiscite 
an whether to introduce a par- 
h a m&i ta r y system at. govern? 
men! 

Such a system is alien to 
most Brazilians, who favour 
heroic presidentialism. One of 
the lew slogans which Lula 
shared with his left-wing rival, 
Mr Leonel Brizola, is that nei- 
ther wanted a presidency 
reduced to the pitiful preroga- 
tives of “the Queen of 
England*. 

If a parliamentary Systran fa 
agreed, one possible - if some- 
what improbable — outcome of 
Brazil's first presidential elec- 
tions for 29 years could be 
squat, bearded Lula ending. UP 
a prune ministerial Sancho 
P&nza to srdadly -President Cal- 
lot's sadder : and wiser- Don 
Quixote. - 


By Lionel Barber 


THE US trade deficit will fall 
“substantially" this year but 
the Bush administration is con- 
cerned about whether it can 
continue to be cut, Mr David 
Mulford, Treasury Under-Secre- 
tary, said yesterday. 

Mr Mulford predicted a 
decline of around $35bn (£22bn) 
this year. This could reduce 
the 1989 merchandise trade def- 
icit to just over $90bn. 

Speaking via satellite to an 
audience in West Germany, Mr 
Mulford said he was “not 
alarmed" about the dollar’s 
recent steep 10 per cent decline 


against the West German 
mark. He noted that the dollar 
had fallen by only 2 per cent 
against the yen. I 


There was no need at the 
moment to call for a meeting of 
the Group of Seven finance 
ministers to di-raium pr-rhatigg 
rates, he said. 


Traders in Frankfort inter- 
preted Mr Mulford's comments 
as signalling that the Federal 
Reserve has refrained in recent 
weeks from intervening to sup- 
port the dollar, and drove the 
currency down further. 


The farmer junior Senator 
from Indiana knows that ! 
snuggling up with the conser- 
vative wing of the Republican 
party is Ids best bet to create 
his own political base - and 
even rain a shot at the presi- 
dential nomination hi 1996, 

The Bush-Quay le doable-act 
does, however, go beyond mere 
party politics. Post-summit 
pells show that Ampriiwm are 
split over whether the Cold 
War is over, whether the 
Improvement In superpower 
relations are temporary, a«a 
whether the US should give 
aid to Moscow to improve toe 
Soviet economy. 


Barlow Clowes scandal prompts row over UK colony 


By Canute James in Barbados 


THE FALLOUT from the 
Barlow Clowes investment 
scandal has prompted the chief 
minister of the British colony 
of Montserrat, in the eastern 
Caribbean, to travel to London 
this week In an effort to pre- 
vent a change to the island’s 
constitution. 

The changes would remove 
control of toe island’s offshore 
banking sector from the local- 
ly-elected administration and 
put it under the control of the 
British-appointed governor. 

Mr John Osbourne, chief 


rniwi^Awr of the 39-square-mile 
colony of 12,000 people, is lead- 
ing a delegation in the hope of 
preventing the constitutional 
amendments reaching the 
Privy Council on December 18. 

The proposed changes follow 
Investigations earlier this year 
into Montserrat’s offshore 
banking sector, and the subse- 
quent discovery of irregulari- 
ties in the registration and 
operations of the banks. 

Following the Barlow Clowes 
affair, the UK government 
ordered investigations into off- 


shore bawlring in British terri- 
tories. The. irregularities were 
discovered by officers from 
Scotland Yard and from US 
and Canadian police agencies. 
Tlie licences of several banks 
were revoked and six Ameri- 
cans were charged with con- 
spiracy to defraud. 

Mr Osbourne has resisted 
the proposed constitutional 
changes, claiming that they 
will give the governor of the 
colony “wide powers" over the 
economic, financial and judi- 
cial affairs of the island, 


“The changes will take 
Montseriai back 200 years con- 
stitutionally,” Mr Osbourne 
said, “I will not stand fin: it and 
I win resist it with my life if 
necessary." 

„ He has received support 
from the governments of six 
neighbouring independent 
iraands. At a regional summit, 
the prime ministers of St 
Lucia. St Vincent, Grenada, 
to™nca, Antigua and St Kitts 
raid the proposed constitu- 
tional changes “rejected the 
authority vested in the elected 


members, of the Legislative 
Council” in Mo n t s err a t 
They asked toe British gov- 
ernment to “reconsider the 
imposition of toe-proposed con- 
stitution”,. 

The constitutional row has 
raised questions over the 
future of Montserrat, and 
whether Mr Osbourne’s admin- 
istration will seek political, 
independence for the island. 
The chief minister said a year 
ago; “Make no banes about M 
am a supporter of indepCtt' 
deuce for Montserrat* 1 * - 




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; gINANCIAL TIMES THURSDAY DECEMBER 7 >989 

Toyota to buy 
electricity direct 
from PowerGen 


Py Maurice Samueteon 

- TOYOTA’S European car plant 

Hear Derby is to be Britain's 
first big industrial *itp to bene- 
fit from competition in the 

post-privatisation electricity 

industry. 

- " The £700m Midlands plant, 
.to to start production in lata. 
/ 1992, will buy its - power 

- directly from PowerGen, the 
* larger of the two generating 

companies to succeed the Cen- 
tral Electricity . Generating 

- Bdard, rather than as a cus- 
tomer of the local electricity 
board which has previously 
enjoyed a monopoly. 

The deal is to be announced 
today by Derbyshire County 
Council, which was responsible 
for persuading Toyota to build 
its plant near Derby. The 
authorities acted as Toyota's 
agent in talks over the power 
contract 

The Toyota plant will be 
bufitt over the next 2% years 
and eventually employ 8,000 
people and make 200,000 cars a 
year for sale throughout 
Europe. 

With its electricity Avmmui 
expected to reach 40MW the 
plant could eventually spend 
about £lQm a year on electric- 
ity. 

The site is typical of the 
large-scale energy consumers 
being courted by the succes- 
sors of the Central Electricity 
Generating Board - PowerGen 


-and National Power - and by 
the distribution companies. 

National Power has so far 
appeared more aggressive in 
its quest for direct sales con- 
tracts. It is running a film 
advertising campaign to pro- 
mote direct sales, has sent 
draft contracts to more than 
500 potential customers and 
hopes -to announce several 
teats when privatisati on offi- 
cially commences on April 1 
1990. 

Scope lor such business wSL 
be limited at first, to cushion 
the impact an the proceeds of 
■ tiie area boards and to offer a 
dear field fig independent new 


Far the first four years, the 
Ug two generators will be able 
to compete only for contracts 
for more than 1MW and for the 
next four years for contracts 
over JflOkW. 

They will also be limited to 
supplying no more than is per 
cent of the demand in any one 
distribution company’s areas 
in the first four years, and 25 
per cent in tire second four 
years, after which fimrtg wD2 
be waived. 

However, the electricity 
industry’s regulates: is expec- 
ted to come under press ur e to 
to relax these H"»w« frnm big 
industrial users seeking the 
cheapest possible contracts fix' 
wholesale supplies of power. 


Pearson reorganises 
senior management 


■By Raymond Snoddy . . . 

PEARSON, the publishing, 
banking and industrial -com- 
pany which owns tire Financial 
Thrifts yesterday announced a 

reorganisation of Its manage- 
ment ana thft appointment of 
Mr Frank Barlow-to -be manag- 

• fag dir ec tor «nd chief operat- 
ing officer; " 

- Mr Barlow, .who las worked 
-tor the -Pearson group far 22 
-yeas, is now chfrf executive of 
.the Financial Tunes, where he 
has presided over a transfor- 
mation in -the profitsof the 
newspaper. When he became 
chief executive in 1983 the 
^Financial Times made a profit 
of £im, although this was 
influenced by a UFweek strike. 
i-TMs-yesa: ttfe paper ifr expected 
'terfnake M&m profit- 

* - Mr Bartow Aaid yesterday 
the reorganisation meant that 
-IiCftd Rbikagiham, who r em ai ns ' 
rl mli -ii um mut chief executive 
of Pearson, would be able to 
concentrate more on the future 
direction of the group while he 
would concentrate on the 
day-to-day (derations of the 
divisions. 

“Mr Barlow - will take on his ’ 
new rote, a recreation, of a post 
held by Mr John Hale -from 
1983-86, cm January L 
Mr David Palmer,’ a former 


. news editor and deputy editor 
of frhg Financial Times »"d 
more recently direc- 

tor of St CfamenFs Press, the 
paper’s printing division, will 
succeed Mr Barlow as chief 
executive of the newspaper. 

Hie appointment of Mr Bar- 
low, win be seen as a gm»n but 
significant chang * in the direc- 
tion of the company, hi part it 
reflects the fact that Pearson 
has been getting larger 
through acquisitions in the 
publishing Ind u str y. 

Mr Barlow is also a grammar 
school boy from Barrow-in Fur- 
ness, north-west RwgUmH who 
qualified as an accountant in a 
company that has traditionally j 
. been- run hy .members of .-the 
Pearson fondly - and a generous 
sprinkling of Old Etonians. 

More Important, he is a 
newspaper manager who will 
be taking over the day-to-day 
running of a conglomerate 
whose interests range from 
merchant hanking, fine china 
and oil services as well as pub- 
lishing, which has been coming 
more to centre stage. 

‘ Mr~Bariow, 59, said yester- 
day; *T have always always 
taken the view that 1 could run 
an animal feed factory if I had 
to." 


In Brief 

Shell chief 
selected 
as rail 
chairman 

Mr Bob Bam , chairman and 
rflirf ptp o m Http of Shell UK, is 
to succeed Sir Robert Reid, bis 
rmrftlnt pd namesake, as Chair- 
man of British Rail, widely 
regarded as one of tile most i 
rtHtwqih: jobs in the co unt r y , 

writes Kevin Brown. 

Mr Cedi Parkinson, Trans- 
port Secretary, ended weeks of 
speculation by announcing 
that Mr Reid would join the BR 
board as chairman-designate 
on January L. 

Mr Reid. 55. Is a lifetime ad- 
man who has spent 33 years 
with Shell. The son of a Scot- 
•tish butcher, he m m r w|n ' <) the 
loss of his right arm to become 
a successful golfer, and Is 
regarded as a tough and deter- 
mined manager. 

Mr Reid told the Financial 
Times he believed it would 
take a year to get to grips with 
BR. But he denied that he had 
been selected as a "tough out- 
sider” who would shakft up the 
railway and prepare it fix pri- 
vatisation. 

Ambulance moves 

The Association of Profes- 
sional Ambulance Personnel is 
set to launch a programme of 
industrial action, in a sharp 
tumroond of its decision just 
24 hours earlier to back the 
Government’s 9 per cent pay 
offer. The move will scupper 
government plans to use APAP 
to break deadlock in the 12- 
week l""g nthpImiMj dispute. 

Glaxo reassesses 

Glaxo, Britain’s biggest 
drugs company, is reassessing 

plana to h mTH a VSnfhn research 

centre at Stevenage, Hertford- 
shire. after estimated costs 
have mounted steeply. It said 
the centre would go ahead but 
construction schedules were 
being revised. 

PMM fees up 

Peat Marwick McLintock, 
accountancy and consultancy 
group, reported foes of team 
in the year to SO September, up 
24 per cent on the previous 
year. UK growth came in & 
year when fees in the interna- 
tional grouping of which it is a 
part, KPMG, moved ahead by 
just 10 per cent to $43bn. 

Guinness case date 

The trial of Mr Ernest Saun- 
ders, former executive of 
Guinness, and others charged 
with criminal offences in the 
Guinness affair has been put 
back until February 5. The 
hearing had been due to start 
on January 8. 

Dally Mall action 

Journalists at the Dally Mall 
newspaper have voted for 
industrial action over the com- 
pany’s plans to end recognition 
of the National Union of Jour- 
nalists and bring in a system of 
individual contracts. 



UK NEWS 


Learning the wider lessons of Lockerbie 

Jimmy Boros reviews a report on the prospects of preventing terrorism 

h& iHarimlHW this week *T%8 hnit»] fart ill that “mAil oof and idaIaama uA.t II t « -I. l. ■ 


T he disdoBure this week 
that the Swedish 
Authorities working 
ckwely with Scottish detectives 
have idftwtifipd a suspect In the 
bombing of the Pan Am 747 
last December lias raised hopes 
of a breakthough in the inves- 
tigation into the disaster. 

And yet with the first anni- 
versary of the Lockerbie bomb- 
ing just a fortnight sway, the 
development has brought lim- 
ited comfort to those who have 
been drawing wider lessons 
from the fatal explosion which 
killed 270 people. 

In a paper published yester- 
day by the independent 
Research Institute for the 
Study of Conflict and Terror- 
ism, Professor Paul Wilkinson, 
widely regarded as an author- 
ity on terrorism, argues force- 
fully that tiie world's civil avia- 
tion security system is so 
riddled with organisational 
and technological shortcom- 
ings as to maV«» further ‘Lock- 
erbie8 a difficult to prevent 
without concerted political 

Urtjnn 

Professor Wilkinson writes: 


"The brutal fact is that govern- 
ments lack the will to set avia- 
tion security high on the 
domestic policy agenda, let 
alone the agenda of interna- 
tional organisations." 

In the aftermath of the Lock- 
erbie disaster, the British and 
US Governments launched a 
Joint initiative through the 
International Civil Aviation 
Organisation's (ICAO) Aviation 
Security Panel to improve 
intenatlonal co-operation 
against atriinn bombings. 

Britain introduced specific 
measures such as new stan- 
dards for access to employers 
at UK airports, screening of all 
hold luggage on high-risk 
flights, and closer checking of 
all electronic equipment taken 
on board aircraft. 

The US for its part focused 
part of its efforts on research 
and development to produce 
effective new security technol- 
ogy capable of detecting plastic 
explosives, such as the proto- 
type thermal neutron analysis 
(TNA). 

According to Professor Wil- 
kinson notwithstanding these 


“modest and welcome 
reforms”, it is "clear that the 
steam appears to be going out 
of the campaign for improved 
aviation security." 

In recent weeks the ifernandc 
by relatives of the victims of 
the Lockerbie disaster into an 
Tnflqy'nrtpnt investigation into 
security at British airports has 
made little headway with the 

Government. 

Ministers are believed to 
have argued that such an 
investigation would not only 
cut across the current criminal 
investigation being carried out 
by the Scottish police but 
would also risk playing into 
the hands of terrorists by pub- 
licly exposing details on seco- 

I matters. 

n the meantime public 
debate surrounding the 
Lockerbie disaster has 
increasingly been overshad- 
owed by reports of continuing 
rivalries between intelligence 
services and the circulation of 
misinformation by some of 
those most closely involved in 
the disaster. 

Before this week's develop- 


ment. Scottish police are 
believed to have complained 
about the lack of cooperation 
in West Germany, while the 
rcte of other countries in the 
affair has been made increas- 
ingly murky by a succession of 
nu substantial Pd allegations. 

Professor Wilkinson’s report 
identifies “effective co-ordina- 
tion, command and control of 
all aspects of counter-terrorism 
policy” as one of the key 
requirments for an effective 
International aviation security 
system. 

He also urges a much greater 
investment in. and distribution 
of, a combination, of high tech- 
nology equipment of the kind 
that might have helped avert 
the Lockerbie disaster, 
together with enhanced train- 
ing of security staff 

The TNA machines, which 
are being researched by the 
US, are aimed at detecting 
explosives more accurately by 
'bombarding' baggage with 

tow-energy neutrons ami htene- 
tifying the characteristic suma- 
tutres emited by the nitrogen 
arm hydrogen present in the 


Property group in 
novel reorganisation 

Paul Cheese rigid. Property Correspondent 


Judges uphold Irish 
broadcasting ban 

By Raymond Hughes, Law Courts Correspondent 


BRITISH LAND, the fifth 
largest UK property group, yes- 
terday announced a corporate 
reorganisation, unprecedented 
in the sector, which seeks to 
provide for its shareholders a 
mpnno of realising the hidden 
value of their assets. 

It is establishing a new com- 
pany, New British Land, to 
take over £389m worth of 
assets and proposes to sell the 
rest of its £1.45bn property 
portfolio, distributing the pro- 
ceeds to shareholders throug h 
dividend and repurchase of 
Hwir shares. 

Immediately British Land 
shareholders are being offered, 
as a dividend, 13 shares in the 
new company for every 40 they 
held in tne cud, and a chance to 
twirft part hr a tenHftr for the 

gp r phi>iip Of 10 per rent of 

British Land’s equity at a price 
of 430p a share. 

British fonH h»g b een con- 
cerned that its shares, like 
those of other property invest- 
ment companies, have been 
trading at a discount of 40 per 
cent to their net asset value. 
The scheme is designed to real- 
ise the value of the assets and 
hence compensate fir the poor 
market performance of the 
shares. The iwimwfKntft effect 


was to lift the British Land 
share price in heavy trading to 
403p, a gain on the day of 4Sp. 
But shares in other property 
investment groups like Land 
Securities and MEPC were also 
heavily traded. 

Brokers were complimentary 
about the scheme but had 
mixed feelings about its effects. 
Charterhouse Tinley said it 
was a decent deal for British 
Land shareholders. Barclays de 
Zoete Wedd termed it bright 
and well worked out 

The immediate question 
from the market was the 
extent to which the British 
f-anii gfthftmft might put pres- 
sure on other groups to enlarge 
their dividend payments 
through the sale of buildings. 

The timing is related to the 
presence on the market of for- 
eign institutions, mainly Japa- 
nese, ready to buy investment 
properties at low yields. 

But British land h«g itself 
been in the market The docu- 
ments of its new scheme reveal 
that it has done a second sale- 
and-leaseback deal with J. 
Sainsbury on U supermarkets 
valued by Donaldsons, char- 
tered surveyors, at £88m. 

Off with the old: on with the 
new. Page 26; Lex, Page 18 


THE GOVERNMENT’S ban on 
radio and television interviews 
with members of the Irish 
Republican Army, Sinn Fein 
- its political wing - the 
Ulster Freedom Fighters and 
other Northern Ireland organi- 
sations has been upheld by the 
Court of Appeal. 

Lord Donaldson, the Master 
of the Rolls, senior member of 
the judiciary, and two other 
appeal judges yesterday dis- 
missed a challenge by six 
broadcasting journalists end a 
representative of the National 
Union of Journalists to the 
High Court’s refusal to rule 
unlawful directives issued last 
year by Mr Douglas Hurd, then 
Home Secretary* 

The journalists were given 
leave to appeal to the Law 
Lords, the highest domestic 
court of civil appeal. If they 
l op ft there, they may take the 
case to the European Court of 
Human Rights in Stras b ourg; 
since part of their argument is 
that the ban breaches Article 
10 of the European human 
rights convention, which guar- 
antees freedom of expression. 

The ban prevents the BBC 
and Independent Broadcasting 
Authority from broadcasting 
directly words spoken by peo- 


The Fine Art Of Flying. 

by Tahuchi. 




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L , Paris may be the perfect 
I gateway for connections 

K to Europe. But it's also 

Pp.. the perfect place for a 
r ;v stopover. Especially /ion; 
‘ in the year of our 


p ^ "'-?.«•) Bicentennial. Take 

v •£' ■jfflMS'';' Europe's No. I airlii 

. ~.t- v - 1..|- ■ : ' the city it calls hom 


mm 






Europe's No. / airline to 
the city it calls home and 
discover the spirit of 
freedom. Air France. 
Don 't you desene 
a little liberty ? 




mm .juflfpgygi 




-^Vi. ; . I;""*. 



The Liberty Tree. 


THE FINE ART 
jm OF FLYING 

A.R FRAHCE Jj 


pm* 


pie representing specified 
organisations, or words which 
support, solicit or invite sup- 
port for those organisations. 

It permits indirect report- 
ing-presenters can read out 
what has been said by someone 
whose interview cannot be 
broadcast. 

Lord Donaldson said that 
perhaps the most startling fea- 
ture of the ban was how little 
it restricted the supply of the 
"oxygen of publicity” to the 
specified organisations. 
Because reported speech was 
allowed, those affected were In 
no worse a position than if 
they had access to newspapers 
with circulations equal to the 
programmes audiences. 

“If the directives are to be 
criticised at all, it must be on 
the basis timt any use of the 
power win, or may, damage the 
reputation of the British broad- 
casting authorities for total 
jwrippftnrfroftft from the govern- 
ment of thft day and that ftk 
price Is not worth paying for so 
gmflii an effect,” Lord Donald- 
son said. 

He rejected the journalists’ 
argument that the Home Secre- 
taiy had acted unreasonably or 
perversely in the direc- 

tives. 


explosive chemcicals. Other 
techniques include cbemilum- 
iscent miffing machines based 

on vapour analy sis of the air 
surrounding passengers. 

W ithin the aviation 
industry objections 
have been privately 
raised to some of these technt- 
qiues both on grounds of costs 
and practical mcanveniece to 
passengers. 

Professor Wilkinson insists, 
however, that in terms of the 
extra investment needed, “we 
are talking about a tiny frac- 
tion of the overall manufactur- 
ing and operating costs in the 
aviation industry." 

And he questions whether 
new technology-based multiple 
checking systems would need 
to he any more time-consum- 
ing and frustrating than cur- 
rent security checks. 

On the contrary "the passen- 
ger would have the satisfaction 
Of knowing that safety . . . had 
been greatly enhanced." 

The Lessons q f Lockerbie. Paul 
Wilkinson. R1SCT. 136 Baker 
Street. London W1M IFff 

Stevens team 
makes number 
of arrests 

By Our Belfast 
Correspondent 

A SUBSTANTIAL number of 
people were arrested In North- 
ern Ireland yesterday by the 
Stevens inquiry team which is 
investigating allegations of 
link* between loyalist paramil- 
itary organisations and ele- 
ments within the province’s 
security forces. 

It is understood a number of 
members of the Ulster Defence 
Regiment, were among those 
detoined. 

In Belfast a statement 
released by the Royal Ulster 
Constabulary said: “A substan- 
tial number of people were 
arrested this morning under 
the Prevention of Terrorism 
Act and are Minting the Stev- 
ens inquiry team in investiga- 
tions Into serious crime." 

Mr John Stevens was 
appointed by Mr Hugh 
Annslcy, RDC Chief Constable, 
to head an inqnixy into alleged 
leaks of security documents to 
loyalist and paramilitary 
organisations. 

• Mr Peter Brooke, North- 
ern Ireland Secretary, said 
yesterday he detected a will- 
ingness MiMg constitutional 
parties In N Ireland to try to 
find grounds for political prog- 


SMTai 1 ! 

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8 



EUROPEAN COAL AND 
STEEL COMMUNITY 
US$ 50,000,000 Graduated Rate 
Bonds doe 1999 

The Commission of the European 
Communities informs herewith the holders of 
the above mentioned issue that the annual 
redemption instalment due January IS, 1990 
covering a nominal amount of SUS 1.500.000.- 
has been entirely satisfied by drawing by lot. 

The bonds so drawn bear the numbers 37290 
to 38789, these numbers inclusive. 

The bonds are redeemable at par and cease to 
bear interest on January 15, 1990. 

The bonds selected by lot will be reimbursed 
at/or after January 15, 1990 with coupons on 
January 15, 1990 and following attached in 
accordance with the terms of payment 
mentioned on the bonds. 

The principal amount of bonds outstanding 
after the amortization of January 15, 1990 will 
be SUS 41,000,000. 

Luxembourg, December 7, 1989. 



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financ ial 

UK NEWS 


THURSDAY DECEMBER ? 


1989 


Ripples from the B Ae 

Charles Leadbeater looks at the Rover privatisation 



row 


T HE political currents 
that swirl around Brit 
ish Aerospace occasion- 
ally produce a whirlpool which 
threatens to such in others 
involved with the company. 

Such a whirlpool developed 
last week when it emerged that 
the Government had made 
secret concessions to BAe to 
guarantee completion of the 
privatisation last August of 
Rover, the former state-owned 
volume car ma nufacturer. 

For most company chairmen, 
such a revelation would be 
enough to cope with. But for 
Professor Roland Smith, BAe’s 
chairman, the Rover contro- 
versy is just part of the politi- 
cal fabric that still clothes the 
company hi spite of its privati- 
sation in 198L 

• The Rover affair follows an 
National Audit Office report on 
the privatisation of Royal Ord- 
nance, which criticised the 
Ministry of Defence for signifi- 
cantly understating the value 
of the land BAe bought The 
company has since acquired 
Arlington Securities to help 
manage its growing property 
development portfolio. 

• In the increasingly turbu- 
lent defence industries BAe’s 
strategy runs straight through 
the corridors of government 
before it can reach the market 
These issues include the 
restructuring of the European 
defence electronics industry, 
doubts about the financing of a 
£l5bri arms deal in Saudi 
Arabia and the uncertain out- 
look for defence spending in 
the wake of the lining of the 
Iron Curtain. 

• BAe stresses the develop- 
ment of Its civil businesses, 
which include satellite technol- 
ogy and personal telecommuni- 
cations. Most significant is its 
20 per cent stake in Airbus 
Industrie, the European air- 
craft manufacturer. 

This Is another area where 
Prof Smith is juggling com- 
merce and politics. BAe wants 
Airbus to adopt a more com- 
mercial approach Independent 
of government. It has set itself 
against proposals floated by 
the West German and French 
Governments to set up a sec- 
ond final assembly Hue. 

Yet it is also keen to squeeze 
as much as possible support 
from Whitehall. 

In the past few weeks, BAe’s 
approach has been thrown in 
doubt from within its own 
ranks. Last month Mr Adam 
Brawn, a BAe emp lo y ee who - 



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Roland Smith? the Rover controversy is just part of the 
political fabric that has clothed tbe company since 1981 


was Airbus vice-president in 
charge of strategy, resigned 
after criticising the British 
company's attitude towards 
the project 

He is expected to be followed 
shortly by Mr Robert Smith, 
who is not expected to return 
to BAe after serving only seven 
months as Airbus’s finance 
director. 

ff that was not enough, the 
company is in the midst of 
strikes at its Kingston and 
Chester plants which could 
pitch it into further contro- 
versy. 

The strikes are threatening 
to delay components deliveries 
to its partners in the Airbus 
programme. 

Should BAe concede to the 
unions' claim for a shorter 
working week, collective bar- 
gaining at other manufacturers 
would be quickly affected at a 
time when ministers are 
becoming increasingly agitated 
that unit labour costs are ris- 
ing too fast 

So in virtually every direc- 
tion, BAe’s business takes it 
into politics. That is the back- 
drop against which the Rover 
affair leapt to centre stage. 

The affair is the product of 
two pressures. 

First, the Government was 
determined to dispose of Rover. 
But it preferred a politically 
acceptable buyer. 

It did not want to sell to 
another car company, such as 
Ford or VW, for fear that 
Rover plants, dealerships and 
components suppliers would be 
rationalised. 

So, the criteria the Govern- 
ment used for the Rover sale 


•fell well short of free-market 
principles. Political consider- 
ations were woven Into the 
fl«al from the outset. 

Second, BAe wanted to 
diversify away from defence. 
Strong doubts remain over 
fiairnB that Rover may teach 
its permit about mass manufac- 
turing, while BAe can offer 
research in advanced materials 
and design. 

However, in the short term 
the acquisition strengthened 
BAe’s balance sheet, making it 
better able to face restructur- 
ing in the European ddfeacer 
Industry and facilitating the 

flrumdng of WOtk tn 

on long-term defence 
and the Airbus programme. 

But as a letter from Prof 
Smith to Lord Young of 
GrafEham, then Trade and 
Industry secretary, during the 
negotiations mftfcw clear, BAe 
also had politics in mind. 

In the letter, ' which was 
leaked this week; Prof Smith 
said there was growing con- 
cern an bis board "reganfinga 
number of issues affecting the 
relationship between the com- 
pany and the Government both 
in the cfvfl and military fields.” 
He looked forward to ^demon- 
stride evidence of government 
responsiveness to that con- 
cern 1 * if BAe accepted the 
terms of the Rover sale. 

The affair raises difficult 
questions for both BAe and the 
Government 

Sir Leon Brittan, EC com- 
missioner for competition pol- 
icy, is preparing to extend tbe 
Commission's attack on state 
aid to industry. 

Commission offlrials are 


^mining the NAO report on 
the sale to see whether tie net- 
cash injection into. Raves, ol 
£422m <$ 662 m) dmuld ba nses- 
sessed jn the l£ht of the reto 
pony’s undervaluation, ft fe 
murb mom likely that he will 
take action, possibly fay the 
end of the year overeat feast 
part oT the secret E88m. . ’ , , 

If this was addqd to the 
Hover sate price, BAS would be 
presented with & sharp 

itncmma. 

prof Smith almost scotched 
the deal just hours before Lqnl 
Young was due to announce it 
The extra concessions were 
supposed to have provided the . 
margin which enticed BAe 
back into the deal. 

To remain consistent 
cannot simply hand o w 
money, ft must argue that tfaa 
concessions tipped the balance 
hi securing toe deaL v; . 

Yet it is also unreaHatic .to 
suggest that tbe deal may ret- 
rospectively unravel - if . the 
£S8m has to be paid back- BAe 
las already gained £128pi horn 
selling its -stake in fetal. 
Rover's software house, and 
part of its stake in DAF; tfaa 
Dutch commercial vehicle 
manufacturer. ' 

Surplus sites are yet to be 
sold, -but will be added. to fay 
Hover’s recent decision to step 
car Twqfcfag an the two Cowley 
altes in Oxford in the eariy 
19906, a total of more torn 90 
acres. • 

pulling out would jeopardise 
BAe's links through Rover 
with Honda, toe Japanese car 
manufacturer. 

Negotiations on Honda tak- 
ing a 20 per cent stake in 
Rover’s vehicle operations and 
Rover taking a rath of Honda's 
manufacturing, subsidiary lit 
the UK are daes to oondnataa. 

The credibility of thedtversi- 
fleadon strat eg y would also be 
severely undermined if the 
Rover deal was scrapped for 
toe sake of a smaft increase to 
BAe’s debts. 

But the dilemma will be 
political rather than financial. 
The real questions hanging 
over BAe, are toe pr os p ec ts for 
healthy profits at Rover and 
Airbus and . the long-term out- 
look for its defence b rariniw s es 
in a changed internal climate, 
not a relatively small dent to 
its balance sheet, • 

Prof Smith may paddle BAe 
away from the WhirlpooL ft fe : 
going to be more difficult for 
the Government to pull to' 
safety- 



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FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


UK NEWS 


Taylor Woodrow link for capital’s biggest residential scheme by Japanese 

Mitsui in London property venture 


By Andrew Taylor, Constniction Correspondont 

MI PS'Of Constrttctfoii of Japan farmer Br*ri«m House 

» t opartper Taylor Woodrow, headquarters building in the 
toe OK property and construe- City of London, have become 
km group, in sma rt tbe-isrg- active in the UK conmerdal 
«t residential develiqmwTTts to properly market, but have 
be un^rtaken bv centxcd Lai- invested little in residential 
don..; property. 

The development on the site Mr Naoshi Onizawa, vice 
of St Mary Abbots .Hospital in p re d dant of Mitsui Caostxuc- 
Keoshigtan, in London's West ttop* in London this week. 

End, will have a completed the- joint venture with Taylor 
value of at least £T3fim.~ it will Woodrow ‘ ™»»T k 9d the com- 
be far the largest residential pany’s first property invest- 
scheme to be undertaken by a meet in Europe. R had prevl- 
Japanese developerin' the UK. nmdy wiaflo investments in the 
At least two other Japanese US, Australia, Taiwan and 
groups ana a West German Singapore, 
developer, as wefl as several MrOnizawa said the the oct- 
B n nsn groups, sought to part- look far the OK economy had 
ner Taylor Woodrow on the improved during the past 
project. . ■ dec a de . Britain provided a sta- 

Jap anese * .construction hie economic and political plat- 
groups such as Kumag ai Gumi form for Japanese investors. It 
and Ohbayashl, which tMa also provided a natural spring- 
year acquired the Financial board for Japanese companies 


seeking to invest in Europe. 

The approach of thp gmgtp 
market in 1992 would also gen- 
erate increased business far 
developers and construction 
companies in Europe. 

Mitsui is forming a separ a te 
Joint venture with Taylor 
Woodrow to develop a £l6m 
office bunding in Gray's Inn 
Road in central London. It also 
discussing the possibility of 
Taylor Woodrow becoming 
involved In an gffjng develop- 
ment in Tokyo . 

The first phase of the Ken- 
sington development wfll pro- 
vide more thaw 100 apu r^^t g, 
8 penthouse flats wnd 45 houses 
on just over five acres. Prices 
are expected to range from 
£190,000 for a one bedroom 
apartment to about for a 


five bedroom house. There will 
be extensive underground car 
parking with at least two park- 
ing spaces for each house and 
one for each flat Profits on the 
first phase are expected to he 
around £20m. 

Taylor Woodrow and Mitsui 
have an option to acquire *nd 
develop the remaining four 
acres of the hospital most of 
which which will be moved to 

new buildings in Fulham Road. 

The value of the scheme, if the 
rest of the site is developed, 
will be more than £200m. 

Central Kensington Is one of 
Europe’s most expensive resi- 
dential in flw 

area have remained strong 
despite the collapse of other 
nm-ts of the boastzu? market in 
London due to high HE inter- 
est rates. 


VauxhaU model topples 
Ford from sales league 

By Kevin Done, Motor Industry Correspondent 


VAUXHALL, the UK 
subsidiary of General Motors, 
last month ousted Ford from 
the top of the list of best sell- 
tug UK car models for the first 
time since February 1906. - . 

For the first U months of the 
year three Fords, the Escort, 
Sierra and Fiesta, have kept 
their stranglehold, but in 
Novem b er the VauxhaU Cava- 
lier outsold its rivals with sales 
of 11,744 against 10,456 for the 
second-placed ^ord Escort - 

New ‘ car . registrations 
dropped last month to 14&S23, 
(town 407 per cent on Novem- 
ber last year, according to fig- 
ures from the Society of Motor 
Manufacturers and Traders. 

■ The vofrune of UK new ear 
sates has now fallen in three of 
larf ffae months as the- car 
wmrirpt weakens under- the 
impact of higher interest rates 
and the slowdown . in UK 
domestic demand*- - 
' Sales for theflrst U months 
at 2^14,175 were still 425 per 

CBPft (Irifl & 769T*8§D 

and are certain to produce a 
fifth successive record year. 

The latest SMMT forecast, 
however, sees .UK new car 
sales falling next year to 2J.- 

23m. 

Imparted can captured 56.49 
per cent of the UK market in 
November and 57.07 per card in 


the first 11 months, close to tie 
record imports of the first half 
of the 19803. 

VauxhaU made the biggest 

gsrina fagt mrnifh fhawtai to tKo 

growing success of its Cavalier 
range launched a year ago. In 
November it increased its sales 
volume by 18.1 per cent to 
25,229 compared with the 4J 

S cent faD in the overall mar- 
Market share rose to 17.6 
per cent from 146 per cant a 
year ago. 

This year VauxhaU has 
ousted Rover for the first time 
from second place in the UK 
car market. In the first 11 
months it captured 15J2 per 
cent of the market compared 
with 13.5 per cent a year ago. 

- Also, Rover’s share has 
fi*n«n to 15L5 per cent for the 
first 11 months from dose to 
ISO per cent a year ago. 

The biggest losers In Novem- 
ber ware Peugeot of France, 
which has suffered severe sup- 
ply problems after industrial 
action at some of its French 
assembly plants, and KBssan of 
Japan, which both suffered 
falls in market share of more 
than 2 percentage points com- 
pared with a year ago. 

Ford, the dominant UK mar- 
ket leader, had a virtually 
unchanged market share in the 
first 11 months at 28*4 per cent 


Links to inner-city areas 
improved by Government 


By Hazel Duffy 

NINE ministers are being 
assigned to inner-city areas in 
an effort to strengthen fines of 
communication between gov- 
ernment and cities, and to co- 
ordinate government inner city 
programmes. 

The new responsibilities will 
be in addwinn to t.ha ministers* 
existing portfolios. They 
indnde Mr David Hunt, Envi- 
ronment minister with respon- 
sibility for inner cities, who 
iparia ttw» announcement yes- 
terday to Business In the 
Cities' conference, and Mr 
DouglaH Hogg, Mr John Patten, 
and Mr Thn Eggar. 

The Government plan is 
expected to appeal particularly 
to business in thw ptHw [ which 


will be able to go direct to min- 
isters rather than through the 
civil service hierarchy. 

The Government’s Tnafn con- 
cern is to get business more 
involved in its programmes. 
That includes companies based 
in Britain's big cities and 
developers involved in inner 
urban areas. 

Mr Hunt’s plan is a tacit 
admission that the sy s te m of 
City Action Teams has failed 
to came to grips with the prob- 
lem of co-ordination of govern- 
ment programmes. The teams 
are drawn from civil servants 
in the three main d ep a rt ments 
working in the inner cities - 
Employment, Environment, 

Trade and Tn ri nn fr r y 


Sellafield expects 
W German spent 
N-fuel contracts 

By David Fish lock. Science Editor 


BRITISH Nuclear Fuels expects 
shortly to sign new contracts 
worth some hundreds of mil- 
lions of pounds with the West 
German electricity industry, 
for reprocessing spent nuclear 
fuel at its Sellafield factory in 
Cumbria, north-west England. 

The contracts, to treat Ger- 
man fuel during the first 
decade of the next century, 
may be signed before the end 
of the year, senior company 
officials predicted yesterday. 

BNFL announced orders for 
another 800 tonnes of repro- 
cessing during the 1990s, won 
from its existing customers in 
Japan and Western Europe 
who are funding its £l.85bn. 
thermal oxide reprocessing 
plant (Thorp) at Sellafield. 

Mr Christopher Harding, 
BNFL chair man, said the new 
reprocessing orders "effec- 
tively answer those who claim 
the market for reprocessing 
has disappeared”. 

In a reappraisal of Thorp’s 
design two years ago, BNFL 
concluded that Its capacity 
would be 700 instead of 600 
tonnes a year, and set out to 
market the extra L0OO tonnes 
of capacity over the first 
decade of Thorp’s life, from 
1992. 

The new German business 
arises from a decision earlier 
this year to abandon the 
planned Wackersdorf repro- 
cessing plant, expected to serve 
from the late-19908, and negoti- 
ate Instead for reprocessing to 
be done in France and Britain, 

BNFL is also in discussions 
with the US Department of 
Energy, over the use of Sellaf- 
ield technology to manage 
nuclear waste problems in 


major US Government nuclear 

Mr Harding, just returned 
from the US, puts the potential 
market for radioactive clean-up 
of government installations as 
high as SlObn. 

With three major radioactive 
waste management facilities 
totalling over Slbn. investment 
nearing completion at Sellaf- 
ield, it is waking a confident 
case in an area where the US 
has achieved little in 25-30 
years. 

Mr Harding said he believed 
BNFL had already solved a lot 
of the clean-up problems faring 
the US military nuclear sites. 

K has set up a US company, 
BNFL Inc., to be staffed mainly 
by Americans, and plans to 
team up with US companies to 
offer the US Energy Depart- 
ment its terhnifMi experience. 

Mr Harding stressed, how- 
ever, that BNFL was not seek- 
ing US reprocessing contracts. 
He saw no sign of the US Gov- 
ernment lifting its ban on 
reprocessing of civil nuclear 
fUel. 

Reporting BNFL’S annual 
results, he said it had been a 
good year, with turnover up in 
real terms, a satisfactory 
Increase in operating profit, 
and a 26 per cent increase in 
exports to a record £169m. 
However, they gave only a 
modest return on assets of less 
than 55 per cent, he said. 

The government's decision 
not to privatise the nuclear sta- 
tions had advantages for 
BNFL, inasmuch as the Mag- 
ma stations - of which it oper- 
ates two -are expected to con- 
tinue for longer than 
previously expected to require 
its fUel services. 


Thatcher urged to soften stance on Social Charter 

By Ralph Atkina 


FURTHER p ressure on the 
Government to weaken its 
opposition to the proposed 
Eu ro pe an Social Charter has 
come from three sources 
including a report today by a 
Hnnw of Lords committee. 

The latest version of the 
charter should be used as “a 
basis for negotiation," the 
Lord’s report says. 


It follows a research paper 
from the Conser v at i ve think- 
tank Bow Group urging the 
Government to adopt a more 
positive approach to the char- 
tar. 

At the mme time Conserva- 
tive members of the European 
Parliament warned Mrs Mar- 
garet Thatcher that she is in 
danger iff playing Into the 


opposition Labour Party's 
hands. 

Lord O'Hagan, cm behalf of 
the 32 Tories in the European 
Parliament, said: "Mrs 
Thatcher «h«n H sign the char- 
ter declaration. It is a legal 
commitment to nothing. Then 
the Government can fight .iis 
individual proposals point by 
point when they are pro- 


duced." 

The attacks come as Mrs 
Margaret Thatcher prepares 
for the European Council sum- 
mit in Strasbourg starting 
tomorrow. 

The Social Charter - and 
Britain's resistance towards 
it -is expected to be high on 
the agenda. 


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DRAMBUIE IS MADE WITH THE FINEST INGREDIENTS 
(BUT WE CAN’T TELE YOU WHAT THEY ARE.) 


3.2 


. I*-’ 




The secret of Drambuie begins with a 
manhunt. It is winter, 1746. Scottish rebel 
leader Bonnie Prince Charlie is fleeing for his 
life from the English. Helped to safety by 
the MacKinnon clan chief, be thanks tlx old 
man with a curious gift: the recipe for his 
personal liqueur 

Tlx drink that became Drambuie. 

To this day. only one MacKinnon in each 
generation knows the formula. 

He u 'ill admit the presence of rare 15 year 
old malt whiskies. 

He will exp bin that Drambuie is sueet 
and mellow on its own, slightly drier over ice 
and a match for any mixer. 

But ask him about a certain herbal 
essence and he will say to you precisely what 
lx has said to us. 

Nothing. Not a single u ord. 




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FINANCIAL TIMES THURSDAY DECEMBER 


719® 


MANAGEMENTS Marketing and Advertising 


B ritain's brewers are prepar- 
ing for more competitive 
times with the restructuring 
of the industry set in train 
by the Monopolies and Mergers Com- 
mission. 

As a result of government legisla- 
tion, over the next three years some 
11,000 of the country’s pubs will he 
freed from t hA* r ties to individual 
brewing companies- By 1993, at least 
46,000 of Britain’s 80,000 pubs will be 
free houses, able to sell what beers 
they choose to their customers. 

“The pub trade will become like 
any other retell trade,” says MQes 
Templeman, group mar ketin g direc- 
tor of Whitbread, the UK's fourth 
largest brewer. “For us, that means 
the pressure on brands will be 
greater, service levels to the custom- 
ers will have to be higher, and sales 
forces more disciplined." 

Whitbread surprised City analysts 
by electing to stay in the business 
after the MMC shake-up. Despite its 
247-year history as a brewer, the 
company had been expected to 
divest its brewing operations to con- 
centrate on its increasingly success- 
ful activities as a hotels, restaurants 
and pubs operator. 

Peter Jarvis, group managing 
director, admits that such a move 
was considered. But the Government 
compromise on the MMC report - 
which means that Whitbread may 
retain all but 2,120 of its 6^55 pubs 
- apparently helped to swing the 
argument against it 
Last month, Whitbread renewed 
its co mmi tment to its traditional 
business by putting up for sale its 
wines and spirits division, worth an 
estimated £500m; and by paying 


The UK pub trade 


Whitbread re-focuses its range 

Philip Rawstonxe explains the brewer’s strategy in the wake of the government’s monopolies report 


250.7m for Boddington’s regional 
brewing operations. 

But the company recognised that 
if it were to compete successfully as 
a brewer is the post-MMC environ- 
ment, the business would have to be 
given a sharper marketing focus. 

As the first step towards that end, 
Whitbread has restructured its man- 
agement organisation to create a 
new beer division, which covers the 
previously separate brewing, mar- 
keting ptmI gpiBng activities. 

Templeman, who will take over as 
managing director of the division 
early next year, says: “There is a big 
cultural <-tianga to drive through the 
division to give it the necessary 
focus that puts the customer first.” 

The aim is to ensure that the mar- 
keting principles that have guided 
the company’s approach to the com- 
petitive take-home trade in England 
and Wales wQl be asserted In dealing 
with the much larger pub trade. 

Whitbread brands are among the 
market leaders in the take-home 
trade in TSngfonH and Wales — and 
Templeman’s sales director comes 
from that rfite of tHa business. 

A separate division will handle the 
process of turning some 2,120 of 
Whitbread’s tenanted pubs into free 
houses, no longer tied to the brewer; 
a process that may be complicated 


iSraS 

-.AT 


l SpfendkL\Wre always 
p on the lookout for 
inexpensive ingredients. 



by the group’s stakes in several 
regional brewers, which also have 
tied houses that could be added into 
Whitbread’s total, if ft to a 

choice between reducing those 
stakes or freeing more pubs, the 
company seems likely to opt for 
keeping the pub ties. 

Whitbread’s estate of 1,600 man- 


aged pubs will also be run sepa- 
rately, forming another division 
alongside those which will run the 
rest of the group's retailing 
operations: restaurants such as Pizza 
But, Beefeater Steak Houses and 
TGI Fridays; and hotels and other 
leisure outlets. 

Templeman can thUS cnnwn t r afrf> 
cm the development of the portfolio 
of brands with which Whitbread 
increased its overall share of the UK 
beer market during the past year to 
around 13 per cent “Initially, " he 
says, “that will mainly be a case of 
mar keting and selling what we have 
even better.” 

He foresees no radical change in 
marketing and advertising style. 
“Stable agency relationships and 
consistency of style and message are 
important,” he says. Whitbread was 
a founder-client of its agencies — 
Lowe Howard-Spink, Bartle Bogle 
Hegarty and Paragon Communica- 
tions. 

The group raised its spend in con- 
sums: marketing by £7m in 1988 and 
m line with inflation year. Much 
of it is being directed to the Lager 
half of the beer market 

The budget for Heineken .Lager, 
which It hag been producing nndtq- 
licence from the Dutch brewer in the 
UK fra: 25 years, was raised to film 


last year and advertising agency, 
Lowe Howard-Spink, has refreshed 
the message with a new theme: 
“Only Heineken Can Do This." Tero- 
pteman says the very familiarity of 
the brand was becoming a disadvan- 
tage. “It was seen as less exciting 
than some of the newcomers.” 

But Heineken holds the n um ber 
two spot in the total lager market 
(Carting wiaric T^h^i is number one 
in the UK) and is the leader in the 
take-home trade in England and 
Wales. “We shall drive it hard,” 
Templeman promises. 

With Stella Artois, the Belgian 
lager, Whitbread has the brand 
leader, too, in the premium, strong 
lager sector. Again brewed under a 
long-established agreement, its 
annual galpg of more than 500,000 
barrels are higher than many stan- 
dard lagers. 

Apart from advertising, both Hei- 
neken and Stella are supported by 
sponsorship - a marketing tool that 
Whiteread first adopted 30 years ago 
with horse racing to improve its cor- 
porate image and has since extended 
to its brands. Stella Artois has spon- 
sored tennis for U years; Heineken 
has supported ice-hockey for six 
years. 

Whitbread also includes Kal ten- 
berg and Moosehead Canadian l ag er 


In its portfolio and is now testing 
Heineken Export in tire south of 

^Onthe ales side, Whitbread Best 
Bitter has recently increased store 
»nd volume in a declining market. A 
new arrangement to distribu te Mar - 
ston’s Pedigree, and the acquisition 
of Boddington’s, analysts agree, pute 
the group into a good position to 
take advantage oftite post-MMC rue 
that all tied houses must stock a 
“guest” cask-conditioned ale. 

Those two brands, together with 

the recently-launched cask-condi- 
tioned Whitbread Best, are but- 
tressed by a range of 15 regional 
brews - including Flowers in tto 
west south-west; Fremlln and 
Wethered in the south-east; Trophy 
and Castle Eden in the north-east 

Whitbread White Label commands 
a massive lead in the low-alcohol 
bitter market: and Morphy’s Irish 
stout, brewed under licence, has 
shown rapid growth since its intro- 
duction in 1988. Murphys is already 
sponsoring golf; and- the regional 
advertising with which it was 
launched will be broadened into a 
national ca mp a ig n. 

More new products may be added 
to the portfolio, but support for the 
current brands in an increasingly 
competitive climate implies heavier 
pressure on profit margins from 
higher marketing costs. 

Templeman agrees that it will be 
vital for his division to maintain the 
long-term drive that has enabled 
Whitbread to reduce costs - 
through rationalisation, reductions 
in beer losses during proces s ing, and 
improved training - over the past 
five years. 


D o you just sell big 
Lumps of machinery 
or can you also mar- 
ket them? 

Caterpillar, tee US construc- 
tion machinery and heavy 
equipment maker, has brought 
a new slant to this issue by 
offering its dealers a sophisti- 
cated computer “tool” which Is 
both an aid to efficiency and a 
slightly gimmicky marketing 
ploy. 

The company is offering its 
dealers a software package 
which will help them identify 
the exact type of equipment a 
customer wants. This Is avail- 
able in tile US to help people 
make the right choke of Cater- 
pillar en ginpa for OD- and off- 
highway tracks and for boats. 
It is also being introduced into 
tiie UK and the rest of Europe 
for the sale of generator sets. 

The software has been 
designed at substantial cost to 
come with extensive colour 
graphics and “blow up” shots 
to give customers clow-ups of 
the working parts of the equip- 
ment they buy. This has been 
dnnp to TTmka it more fun for 
tee customer. 


Moving the earth for its customers 

Caterpillar is taking computer graphics to its dealers. Nick Garnett reports 


“The software makes the job 
of selecting the right equip- 
ment quicker and easier but it 
is also a marketing tool to 
attract potential customers 
into Cat dealer showrooms,” 
says Alan Scott, the 37 year- 
old computer expert at Cat 
who designed the system. 

“It is a way of getting cus- 
tomers to our dealers so they 
can see our equipment. It is a 
way of catching tee customers’ 
eye and getting teem to look 
at our technology." 

Caterpillar, which claims a 
10 per cent share of tee Euro- 
pean and African generator 
market, offers diesel engines 
with 70 different horse power 
ratings. It has more than 80 
different generators ranging 
from 50 kw to 5250 kw and 
three variations of radiator. 

The kind of generator set 
required by a hospital, factory, 
irrigation plant or pumping 
station is governed by a series 


of considerations. Will It be a 
standby or w 1 * for contin- 
uous operation? Will kerosene 
or diesel fuel be used? At what 
altitude wOl It operate? 

The vendor also needs to 
know what load a standby 
generator has to carry, in 
other words how many big 
motors for powering elevators, 
compressors and so an it will 
have to start up after a mains 
power failure. 

A production factory might 
also be se ns i ti ve to what is 
called voltage dip. If the volt- 
age strength coming from a 
generator falls, say, 12 per 
cent below normal because of 
excess load, it could seriously 
disrupt the operation of elec- 
tric-powered machine tools, 
resulting in expensive damage 
to th e meta l workpieces they 
were cutting. 

Other constraints include 
the dimensions of the genera- 
tor house and tee kQowattage 


of lighting the generator 
would be expected to provide. 

The software package 
offered to dealers at a cost to 
them of $650 incorporates a 
series of questions, the 
answers to which eventually 
produce a recommended com- 
bination of engine, generator 
and radiator. This saves a lot 
of time that would otherwise 
be ^ent by engineers at Cat 
and at the client company hav- 
ing to work laboriously 
through technical drawings 
and sheets of figures. 

But what is striking about 
the Gat software is the way it 
has been overdesigned, giving 
it some of the characteristics 
of a computer game to lure 
potential customers through 
the doors of Cat dealers. 

The display, which can be 
projected onto a big screen, 
incorporates a form of colour 
OTiitnatj oTi where moving com- 
ponents are made to look as if 


they are actually moving. 

Parts of the generator set 
can be enlarged to see the 
internal workings of, for 
wwnplp, the gvhnnrf system, 
ventilation and tortional 
vibration on the oankshafL 

“The idea here is that the 
Cat dealer can say *Hey, this is 
what your equipment is actu- 
ally going to look like’," says 
Scott. 

To imdgrihm how Im portant 
the marketing angle is to Cat, 
tiie US company is looking at 
the possibility of ™ri«g even 
higher resolution graphics 
which would make the engine 
look almost real. “The prob- 
lem with that is that it would 
need a lot more hard disk 
space and involve a lot more 
cost” 

The software allows a Cat 
dealer to give, within a few 
minu tes, a simple estimate of 
the type and cost of a genera- 
tor a customer may require. 


-‘-If- 


T- - 


Coolirvg - Radiator Duct 
Ducts incorporate flexible Joints to 
prevent vibration transn iss ion . 


FT-Help PgUp/ FgDn-Prev/ Next Pl0-ttain 


The result is printe d out on 
hard copy. But its main func- 
tion is to produce a longer, 
detailed breakdown of the pre- 
ferred solution, together with 
a detailed price quotation. 

It also offers a 10 year- 
investment analysis of each 
wipnp «nd c o vers things like 
fuel overheads and labour, ser? 
vice, and spare part costs. 

Because there are usually no 


more than two Cat dealers per 
country outside North Amer- 
ica, the s o ft wa re and the IBM 
equipment it is used on can be 
transported to costumers’ own 
sites. 

The software Is in 
but from next year Cat deaims 
win be to translate tee 
.question and answer menus 
into their -own national lan-' 
gnages. 





IN RBCEWT ... 
marketing se r v ice s 
■been awash -*r ' 

as the imbUdy _ 

ing companies nave bought 
other businesses; and almost 
all the acquisitions have 
involved earnouts. 

Earnouts are tire mecha- 
nism whereby one company 
agrees to buy another for a 
sum composed of an initial 

consideration and a perfor- 

eam-out - plumed over a 
period of time. 

Ostensibly the earnout looks 
like an ideal device - espe- 
ddly in a volatile industry like 
marketing - in that It reduces 
the risk of one company paying 
an inflated sum for another. 
But a new study from Spicer & 
Oppenheim, the accountants, 
shows that, although earn-outs 
are still seen as attractive, they 
can also depress the perfor- 
mance of newly acquired com- 


One of the main disadvan- 
tages is that earn-outs can 
encourage the vendor of a busi- 
ness to maximise short-term 
profits - in order to pump up 
the performance-related pay- 
ments - sometimes at the 
expense of long-term growth. 

Another disadvantage is that 
the employees who did not 
benefit from the sale of the 
business might feel resentful. 
There may abo be problems 
when the earn-out period 
cornea to an end and the ven- 
dors leave. 

- Spicer suggests teat any 
company Involved with earn- 
out acquisitions should “man- 
age in advance" - through 
dose monitoring and board 
representation - and that they 
should plan ahead for the ven- 
dor’s departure. 

As for tee vendors, the study 
shows teat they tend to be in 
favour of earnouts, although 
many were over-optimistic 
about the amount of money 
they would receive. 

Some vendors cited “loss of 
control" and “pressure for 
short-term results” as disad- 
vantages. But tee main advan- 
tage to team was, not surpris- 
ingly, “gain hi wealth" - in 
other words, money. 

Earnout Agreements - Their 
impact on Marketing Services 
Co mp anies is available firm 
Spicer & Oppenheim, 13 Bruton 
Street, London WlA 7ABL £65. 

Alice Rawsthorn 


ACCOUNTANCY APPOINTMEKTS 


Management 

Accountant 

Group Head Office 


Hong Kong 

Tax paid salary 


The Hongkong and Shanghai Banking Corporation Limited is the 
parent company of the HongkongBank Group, a major and fast 
growing financial service organisation. With its Head Office in 
Hong Kong, it has 1,300 offices in 50 countries and a staff of over 
52,000. 

An opportunity has arisen for a Management Accountant to join our 
Group Finances Department, based in Hong Kong. Responsibilities 
include planning and controlling tee Group's asset and liability 
management database, variance analysis and commentary, co- 
ordinating the Group’s forecasting and budgetary control system, 
and enhancing consulting in management accounting principles and 
their applications in Group Information Systems. 

Candidates should he of graduate calibre, a member of CIMA, with 
a minimum of 5 years' Management Accounting experience in the 
financial services industry. Experience in a Head Office 
environment would be a major plus. Can did at es must be able to use 
personal computers to solve business problems and have good 
communication skills. 

Employment will initially be on the basis of a two year contract. 
The expatriate benefits package includes a tax paid salary of 
cJHKD350,000 p.a.. free furnished accommodation, 25% gratuity, a 
housing loan in your home country at a preferential rate, six weeks’ 
annual leave, and allowances for leave travel, and for children's 
education and holiday passages. 

Please apply by 21 December by sending a foil curriculum vitae to: 
Patricia Coulson 

Manager International Recruitment 
The Hongkong & Shanghai Banking Corporation Limited 
99 Bishopsgate 
London EC2P2LA 


HongkongBank 

Tfcg Bongfcoag and Stoagturi Banking Corporation Lid 


MANAGEMENT ACCOUNTANT 

Salary by negotiation Central London 

- attractive benefits 
Age 28 plus 

Stanley Gibbons, the Internationa! Stamp Dealers, are in the process of 
expanding their management reporting and accounting team. This 
Includes the replacement of their existing computer systems at their 
well-known address at 399, Strand. 

The new management accountant win be reporting to the Finance 
Director and will be responsible for managing and motivating a small 
team to provide timely, accurate and quality management reporting, 
co-ordination of budgets, forecasting and cash management 
The successful candidate wilt have at least five years' accounting 
experience, preferably In a consumer orientated environment and will be 
computer literate. Type of qualification is less important than accounting 
skills, confidence and enthusiasm. 


STANLEY 

GIBBONS 


Please apply tn confidence 
with a concise c.v. to: 

The Finance Director 
Stanley Gibbons Ltd 
399 Strand 
London WC2R OLX 


LEGAL NOTICES 


No. 007388 eMSSS 
M TIE HIGH COURT OF JUSTICE 
CHANCERY (XVRStON 

IN THE MATTER OF 
ERA GROUP PLC 
AND 

Bd THE MATTER OF 
THE COMPANIES ACT IMS 


NOTICE B HEREBY GIVEN that a PafMon 
waa on too 21*t NontntHr 18BB prow— a to 
Hor M MNaqra Hiatt Court % % Juscte* tor mo 
owUrm aaon of the canc e llat ion or toa snara 
Promtura Account of ttn sbovo-nomed com- 
pany ■ *1* On* Of No««mtrar HOB. 

AND NOTICE « FURTHER GIVEN Dot too 
aid PeWcn h dJractad to bo hoard betara 
mo HonowaMa Ur. Juadoa Hannan at tha 
Royal Courts of Juntos. Strand, London. 
NCSA Z± on Monday M day of Oacombor 
nee. 

ANY orwuer or ohoraheldor of mo ooM 
Comport/ doolrl ng to oppose the making of 
an Ordar lor mo conBrmaBoo of mo ooM 
eaneoilotton of toe Short Proadum Account 
atma Company Should appear or too than of 
b o at ing In parson Or bj Gounod tor that 


A nop* Of mo ooM Pottton win bo fumWiod 
to any ouch poraon requiring mo mho by 
mo itodnmwndonod adiofton on payment of 
Vm iPfluUtort charge tor mo tamo. 

Doiad mm 7m day td December two. 

witdo Septs 
Qssonsbridgs House 
a Upper Thames total 
London EG4V SBD 

Soilcnera tar mo above mmolc n sd Company. 






Royal Nat iona l 

Lifeboat 

Institution 


Head of Finance 


Poole, Dorset 



The Royal National Lifeboat Institution is an independent 
charily whose sole aim is the saving of life at sea. Founded in 
1824, it presently maintains over 200 lifeboat stations in Great 
Britain and Eire, tee financial support for which comes wholly 
from voluntary donations and subscriptions. Its annual income 
in 1988 was close to £40 million, making it one of tiie largest 
charities in the UJC 

Reporting to the Director, the appointee win be 
responsible for the foil finance function including tiie annual 
budget and monthly reportixg, major capital expenditure 
programmes, and all tax and legal matters. You will also play a 
commercial role in areas such as contract negotiation, as well as 
providing sound strategic financial advice to the Director and 


e. £30,000 p.a. 

other members of tee senior management group. 

Candidates will probably be chartered accountants, aged 
35-50, with experience of running a finance function for 
a private or public sector organisation. Personal qualities 
must indudeexcdDfeat interpersonal dcuk, enthusiasm and the 
drive to contribute ai both strategic and operational levels. 
Tb succeed, you will have strong empathy with the Institution* 
aims and philosophy and the stature to represent them to a 
wide range of external contacts. 

Please reply in confidence to Sarah Orwin, quoting 
Reference ER 213, at Ernst & Young Search and Selection, 
21 Conduit Street, London W1R 9TB. 


Ernst &Young 


H 

U 

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Id 

GO 

a 

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< 

s 

u 

ae 

< 

w 

on 


il 


NORDIC COUNTRIES 
+ 1992 


The Financial Times proposes to publish this 
survey on: 

25th January 1990 

For a full editorial synopsis and advertisement 
details, please contact: 

Chris Schaanning or GSBaxi King 
on 01-873 3428 
or 01-873 4823 

or write to him/her at: 

Number One 
Southwark Bridge 
London 
SE1 9HL 


financialtimes I 

piwgjiwgBtw»iwa > 


COMPANY NOTICES 


GENERAL MOTORS 
CORPORATION 

NOTICE IS HEREBY GIVEN that resulting from the 
corporation s declaration of a dividend of $ 0.75 
(gross) per share of the common stock of the 
corporation payable on the 9th December 1989 
there will become due In respect of the bearer 
depositary receipts a gross distribution of 3.75 
cards per- unit The depositary will give furthtf 
2£5L < r£J ,f tho st ® r,in 9 equivalent of the net 
k on ^ unrt on and after the 15th 

"LS-Jr mu ®i be accompanied by a completed 
claim form and USA tax declaration obtainable 
from the depositary. Claimants other than UK 
banks ana members of the stock exchange must 

!£?£®«« th n!LJ i . ea , r ® r depositary receipts for 
marking Postal claims cannot be accepted. The 
corporations s third quarter report for 1989 will be 

n amed b below ^ ap P ,,cation to the depositary 

. Barclays Bank PLC 

^x*Btthaige Sendees Department 
54 Lombard Street London EC3P 3AH 


«/ 


Quebec Central 
Rtfwsy Company 
Capital Stock 

to prapuafloo tor to* payment at too 
*wr sworty awMond duo aonmiy is 
** «"»*» 

«oohs wB bo dosed at &30 nm « 
**«»•»« E2 1088 and <*HI bo r*- 
Atoned on January 2, tgaa 
a R Hood 
AaB/atnnt Sea awr y 



CLUBS 


EVE 

fcM oaQwod OH octet (Mcaoto rf * 
poBq, cal Ur pby and wtoto wowg; 
Sapper ftm 10330 an. DUto —4** 
BHUtetato, tfanuroot faoctnacs, eKtoW 
Domboac. 

01-7340557. 
189JRagdit St, 

InnHnn. 




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FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


THE POWER OF BELIEF: #1 in a series 


When you aim for perfection, 
vou <lisco\er its a moving target. 


Every advance in quality raises 


new expectations. The company that is satisfied with its 

progress will soon find its customers are not It is this 
belief that has spurred Motorola to a 100-fold improve- 
ment in quality since 1981. ■ Our formula is a simple 
one: First, we banish complacency. 

Second, we set heroic goals that 
■compel new thinking . Finally, we 

Y • I’M *i M 1 I for 20 year*, we have been making semiconductors in East Kilbride. ^ 

TfUfiA' thA llflr Dfi H/jQ HA!)! 9 poph IVAal Today defects, once measured in parts per thousand, 

JL'CU^V tXJ.v/ JkJrCUL O/l? ff V/ llV/QJ. C^Ov/J-L CiLOClJL^ are now measured in parts per nuffion. Our goal is Six Sigma quality. 


on it*; 
:ciawr 
•■■s/arad 
rvoL'sd: - 
i-*:h ..*r 

tu sur- 
» c.iuh- 
tf - l: 

S M"! /.* 










- .^SH 


for 20 years, we have been making semiconductors in East Kilbride. 

Today defects, once measured in parts per thousand, 
are now measured in parts per million. Our goal is Six Sigma quality. 


and set it out of reach all over again. ■ Today, Motorola’s 
standard is Six Sigma quality, and we aim for only 8.4 


Svs -4 ' t-V ■*» 


Motorola were one of ihefir-rffo be awarded 
ford Europe’s prestigious Q1 pr eferred quality 
award for our ESC2 jgnr&on timing component. 


mmlKM defects per million pieces in all we do 
'|lM^gp|^ by 1992. Such standards are naturally 

| Motorola were one of fee first to be awarded • J 1 ■ 'fe - 11 T1 i~l 

l ; appreciated by Kolls-Koyce, the arch 

■ I - 

si 

perfectionists, who have chosen us as their sole 

3! 

supplier of car phones. ■ Total customer satisfaction, 
our goal, is now on the horizon. 

We dare not rest in its pursuit 





C 1089 MOTOROLA. INC. Motorola and (®) are registered trademarks of Motorola. Inc. 





FINANCIAL TIMESTHURSDAYDECEMBEA7 


TECHNOLOGY 


David Fishlock reports on Pilkington’s invention of an advanced integrated circuit 

Glass breaks into chip market 


P ilkmgtan, the interna- 
tional giassmaking 
group, is developing a 
silicon chip that it 



DPLD local connection system Source; PMeL 


believes is advanced enough to 
be exploited worldwide. Ples- 
sey, the UK electronics group, 
has already taken a licence but 
Pilkington hopes to sign up big 
Japanese chipmakers. 

The integrated circuit 
design, called the dynamically 
programmable logic device 
(DPLD), is the invention of 
Kenneth Austin, an integrated 
circuit designer. He believes 
the circuit could become an 
international semiconductor 
standard. 

The chip carries up to 10,000 
integrated circuits, any of 
which can be reprogrammed 
while the chip is working. It 
can be used to call upon cir- 
cuits as they are required or to 
repair them by substituting 
untapped circuits for any 
which develop a fault 

The speed with which this 
can be done means DPLD’s 
10,000 circuits are equivalent to 
10 times that of current circuit 
design. The reconfiguration 
can be arranged at long range, 
to "self -heaT a fault in a space- 
craft. Cor example. 

According to Austin, the 
DPLD combines the power and 
speed of the application-spe- 
cific integrated circuit (ASIC) 
with the capability or the 
microprocessor. Self-healing is 
a bonus. Moreover, it is based 
on well-established silicon chip 
technology. "I conceived the 
device out of frustration with 
Ari gHng ASICs," he says. 

Austin and PHtdngton came 
together in 1988 through Rain- 
ford Venture Capital, the 
group's venture fund. They set 
up a small research company 
called Pilkington Micro-elec- 


DEVELOPMENTS in contact 
lens technologies mean bifo- 
cal-wearers will soon have the 
option of wearing contacts. 

Ordinary contact lenses and 
spectacle lenses use only 
refractive optics to bring light 
to focus. Using diffraction - 
where light is spread around 
the edge of an object or open- 
ing - as well as refraction, 
which bends light, a bifocal 
effect is created. When light 
passes through two or more 


Ironies Ltd (PMeL), 80 per cent 
owned by Pilkington and IS 
per cent by Austin. 

PMeL's patent a con- 

figurable semiconductor inte- 
grated circuit which has a 
unique local connection sys- 
tem. Each "gate” connects 
directly to a small number of 
other gates, each in a separate 
set (see diagram). Each connec- 
tion can be dynamically 
changed to bring in new func- 
tions or to bypass faults. 

Austin had previous links 
with the group through earlier 
inventions in encryption, using 
ASICs. “I think Pilkington 
recognised that Austin is a real 
inventor and operates best in 
this kind of environment,” 
says Sir Robin Nicholson, the 
group's technical director and 
rhairmqip of PMeL. 

PMeL has been set up specif- 
ically to promote DPLD. Pilk- 
ington has three roles in rela- 
tion to the company, says Sir 
Robin. It provides finance as 
well as experience in both 
exploiting and licencing tech- 
nology. 

The group rejected the idea 
of manufac turing DPLD chips 
itself, or of waring outright to 
the highest bidder. It believed 
that it could earn more by 
licencing to perhaps six silicon 
foundries worldwide. The big 
silicon foundries want new 
chip designs, Sir Robin says. 
The chosen course is expected 
to require development flmds 
in the Tow millions" compared 
with perhaps £100m to launch 
Pilking ton into cMpmaktng. . 

PMeL consulted Douglas 
Stevenson, managing director 
of Software Sciences, Thora- 
EMTs software division, on the 
likely reception of DPLD by 
tiie electronics industry. Stev- 
enson approves of the licencing 


fraction can combine light 
waves to produce an intensity 
pattern, called constructive 
interference. Diffraction brings 
an image to focus at two points 
and does not produce confu- 
sion in a person’s vision. 

The 3M corporation in the 
US has produced a multifocal 
intraocular (within the eye) 
lens, based on diffr active and 
refractive optics, that can be 
fitted in the eye after cataract 


route, although he can think of 
no other British company that 
has tried to break Into semi- 
conductors in this way. 

Plessey, the first licensee of 
DPLD, calls it an electrically 
programmable array (ERA), for 
which it sees two different 
uses. One stems from the hi g h 
circuit packing density inher- 
ent in its design. The other is 
as a design tool to speed partic- 
ularly the design of small 
batches of circuits. Plessey 
plans to market the ERA next 
February. 

Sir Robin Nicholson says he 
is not forecasting' another float 
glass, which l™ notched up 
more than £400m in royalties 
over the last 20 years. “We are 
Looking for £5m-£10m a year 
when the market matures," 


surgery has removed the natu- 
ral lens. Conventional intra- 
ocular lenses use refractive 
optics to focus light. 

The lens is also intended for 
people who are near and/or far 
sighted. The intraocular lens 
has been designed to mimic the 
natural eye’s ability to accom- 
modate for different object dis- 
tances. It minimises the chance 
of a person needing bifocals or 
spectacles after cataract sur- 
gery, according to 3M- The 


which he believes will be in 
the late-1990s. 

D PLD is by no means 
Pilkington ’s only foray 
into micro-electronics. 
Earlier this year it fused two 
advanced-technology activities 
— coated glasses and informa- 
tion -technology - to create 
Pilking ton Micronlcs. It speci- 
alises in data storage and dis- 
play, and manipulates sheet 
glass with a precision previ- 
ously wriitm iwn in thp indus- 
try. 

* Launched with a £6m corpo- 
rate investment in a manufac- 
turing unit at Shotton, Chesh- 
ire, Its mission is “to become a 
major supplier of high added- 
value, glass-related products to 
the electronics industry,” says 
iten Hughes, general manager. 


lenses- have been fitted to a 
limited number of patients. 3M 
is waiting for approval from 
the US Food and Drug Admin- 
istration before making the 
lens widely available. 

Allergan Optical, part of the 
US Allergan corporation, 
recently launched a soft bifocal 
contact lens based on diffrac- 
tive and refractive optics, 
which it claims is the first soft 
dfffrantivn bifocal contact lens 
in the world. Pilkington of the 


For storing large amounts of 
data long-term (archives), it 
has developed a glass Worm 
(write once read many times) 
memory disc capable of retain- 
ing the equivalent of U50Q Yel- 
low Page books. The next will 
be four times as big, Hughes 

claims. 

Glass has the advantage of 
stability, says Julian Barnes, 
commercial director. Barnes 
believes the explosive growth 
for coated glasses in informa- 
tion technology will come in 
flat displays, from 4m square 
metres a year today to 100m 
square metres a year by the 
end of the century. 

Neither architecture nor 
transport offers this kind of 
growth prospect for glass, he 
says. It could amount to a £lbn 
industry worldwide by the end 
of the century. Pilkington’s tar- 
get is to become the dominant 
player outside of Japan. 

Both data storage and dis- 
play products depend on cut- 
ting and shaping glass with 
unprecedented precision - in 
the case of discs, to a few 
microns for both insi de and 
outside diameters. The product 
most also be polished flat and 
free from surface defects. The 
latest Japanese “supertwist" 
liquid crystal displays, for 
example, need pairs of glass 
plates set precisely five 
microns apart 

Value is added when the 
information processing struc- 
ture - coating, texture and 
shape - is applied to glass. 
Lawrence Greasely, technical' 
director, likens it to silicon 
semiconductor technology on a 
large scale. “The trend is big- 
ger and bigger pieces of glass, 
smaller and smaller struc- 
tures." The constant challenge 
is getting a good yield. 


UK developed a hard bifocal 
lens based on diffractive optics 
about two years ago. 

The diffraction, as In the 
multifocus 3M intraocular tens. 
Is achieved by a series of tiny 
con cent r i c rings, a few microns 
In diameter. The Allergan Opti- 
cal lens is a cast moulded 
design, while the 3M lens is 
precision machined to within a 
few wavelengths of light- . 

Lynton McLain 


Price packages 
at a lower cost 

MOST electronic I n for ma t io n 
on share, bond or foreign 
exchange prices changes can 
be received In two ways: 
either as soon sa the changes 
occur, using an expensive 
on-line service; or once a 
day, aflor tin markets have 
dosed. 

For those who cannot afiord 
the former, but And the latter 
inadequate, Reuters, Hie 
news and financial htforma- 
8 on company, has packaged 
Ra prices service so that com- 
panies can receive (he spe- 
cific Information they need 
at the times they naed & 

Aimed primarily at portfolio 
managers, unit trust depart- 
ments and those In charge 
of pension funds, the Snap- 
shot service updates clients’ 
portfolios at p re-determined 
times — hourly, dally or 
weekly. 

The prices, from the world’s 
big markets, are held on the 
Reuter host computer and 
sent from there across the 
company’s data network to 
sub scri ber s ' personal com- 
puters. 

The data can then be used 
to update existing, portfolio 
or spreadsheet so ftware pack- 
ages. Charges depend on the 
type of Information re ques t ed - 
and the frequency. 


Servers share the 
computer work 

SUN NUcrosystema, tiie Cali- 
fornian workstation manufac- 
turer, (s continuing Its foray 
bite the networked workstat- 
ion m a rk e t with two mid- 
range conqxiters, or servers. 

Die two servers are 
intended for use by compa- 
nies who want to ttnk their 
workstations together and 
so share files, print e rs, disk 
drives and other peripherals. 
Although Sun announced a 
family ot computer servers 
earlier this year, yesterday 
It revealed the 490, Its largest 
and most powerful machine, 
and the Server 1, Hs smallest. 

The former can have up 
to 32 Gigabytes of disk capao-' 
ity — which could hold more 
than 5bn words ol text The 
latter, by comparison, la 
aimed at companies that want 
to |oln together b e tw e en Just 
two and five work stati ons. 


Bedsores get 
discharged 

A HOSPITAL bed which pre- 
vents patients developing bed 
sores lies recently been 


announced by the Ahfsfrora -■ 

Group, of HtiteteW, * nd Eura " 
pah's Consumer Products, 
writes Michael Swiss. 

The bad evenly dlsfrfeutee 
the pattern’s weight by using 
a multi-layered system elate 
pockets, rattier than the tram* 
Uonal mattress. TMstedi- ■ 
itique support* tiie body 
evenly end prevents any 
interruption In Mood dreuta- 
Hon — tiie cause of bedsores. 
The scale of tiie problem Is 
demonstrated by statistics 
from the US, where around 
$5m (E3m) Is spent annually 
treating bedsores. . 

The air-pocket system Is 
tikety to prove less expensive 
then existing techniques, * 
which involve computer-con- 
trolled motorised bed systems 
coming up to $50,000 each. 


Computers join 
forces for 1992 

GEARING up to take advan- 
tage ol the single European 
market In 1992 are seven 
computer hardware, service 
and repair companies wtdeh 
have formed s federation In 
order to sendee llielr custonob 
era throughout Europe. 

The dual alms of toe Euro- 
pean Federation of Comput- 
er-Technology (EFQ are to- 
give the individual companies 
greater dout in purchasing 
and to give their customers 
with offices throughout 
Europe the choice of going 
to lust one organisation. i 
Between them tin companies 
do everything from sating- 
laptop computers to rspshirig 
dtek drives. 

The seven companies are 
Altra of West Germany, EAF 
of the Netherlands and Bel- \ 
glum, EPS Etotfronlca In Italy, 
Blacker of Switzerland, New- 
iron of the UK end Material ' 
Management In Ireland. ' 

Mozart is finally 
in the money 

MOZART, one of Austria's 
most famous sons, Is contri- 
buting to tiie country's tech- 
nologies as wall as Hs arts. 

An iridescent stamp-sized 
representation of Mozarfe 
head is being used by the 
Austrian National Baltic on . 
Us latest b an k n o te ha an" 
attempt to prevent fraud. Aa 
the note Is tilted, Mozart’s 
head moves from toll to right i 

The device, known as a 
lOnegram and developed by ! 
Landis A Gyr In Switzerland, 
resembles a hologram. But 
whereas a hologram is a 
laser photograph oka 
t hr e e d iman ston a l object, the 


Bifocal lenses find sophisticated contacts 

openings or by two edges, dif- 



WORTH 

WATCHING 


Ecfitedby 
Della Bradshaw 


Id nogram uses a computer- 
generated design, etched Into 
a nuMtium such as metal fofi. 

The width, depth and angle 
at which the lines of the pic- 
ture are engraved give the 
changes In tiie picture as It 
Is tilted In the tight. 

The foil Kteegramsere 
stamped on to the documents 
so that they cannot be 
removed wflb being 
destroyed. U they are photo- 
copied they wlti produce a 
blurred Image, unlike holo- 
grams where a static picture 
can be successtutiy copied. 

The big advantage it the 
Kfnegram Is that It can be 
printed on paper as wen as 
on plastic, and could ba used 
on driving llcencee or p ass 
ports as wall as bank cards. A 

The disadvantage Is that 
It is an expensive technology. 

The Austrian National Bank 
Is only using If on Its 5,000 
schilling banknote - worth 
approximately £250. - 


Apples keep the 
smoke at bay 

IF your New Yaar*s resolution 
Is to give up smoking, tim 
answer could be an apple-fla- 
voured deticacy now on sale 
In Switzer la nd. 

The Swfch, from Aroma 
Switch of Zurich, looks just 
tike an onflnary dgarette, but £ 
contains no tobacco or nJco- 
tine and Is smo k e l es s . 

Instead, H conta ins granules 
which teste and smell like 
apples. Aroma Switch say 
Oils has a soothing affect 

The other main di fference 
between this and the tradi- 
tional dgarette Is that the 
Switch mint not be IK 


Contacts: Reuters: London 250 1122 . 
Sun Mlerasystsms: US, 415 960 1300 . 
AftMrtxn: Finland, 0 18231 . EFC. UK: 
0482 870036 . Land la ft Gyr 
Switzerland, 4234 11 24 . Aroma 
Switch: Switzerland 13 91 4044 . 


THE COMPUTER MARKETPLACE 


Most computer companies 
“pursue an ongoing horizontal 
diversification polity.” 

We just make the best printers. 

In the diversified, stratified, market-segmented world of computers, if s nice 
to know there’s still some good honest craftsmanship. 

Through sheer excellence. Star has become the second largest 
manufacturer of dot matrix printers in the world and has firmly established itself 
as Europe's fastest growing supplier of computer printers." 

By only specialising in computer printers we exert tighter control over the 
quality of our products. OAfe even design and produce the machine tools used 
to manufacture our printers). 

AO our machines - from the most affordable dot matrix printer to the most 
sophisticated laser printer- feature easy-to-use front control panels. Industry 
standard compatibility and advanced paper handling. Despite being priced 
competitively, every model offers a consistently high level of performance and 
print quality. 

Our dealers and distributors have been carefully chosen to ensure that you 
receive top quality service both before and after the sale. A twelve month on-site 
warranty (UJC mainland only) is included on all Professional and Laser models 
throughout the range. 

If you are seriously considering buying a computer printer let us show you 
there is a choice: Not aQ computer printers are the same. 

For a full product pack and details 
of your nearest Star Registered Dealer 
contact the Sales Information Line 
on 0494 471111. 

COMPUTER PRINTERS 

Star Miaronics UJC. Limited, 

Star House, Peregrine Business Park, Gomm Road, 
High Wycombe, Buckinghamshire HP13 7DL. 

A division of Star Mkraoks Ca Ltd, Japan. 
-tDCBcpwiJmcWW. 

AT THE CENTRE OF EXCELLENCE 



A GUIDE TO EUROPEAN SOFTWARE HOUSES 
AND CONSULTANCIES 
Researched and Published by 

9 


MARKET l 

Available in print or on disk. 
Contact: Market 1 International Ltd. 
Rowlandson House, 289-293 Ballards Lane, 
London N1 2 8NF 
Tel: 01 446 8431 Fax: 01 446 1963 


THE COMPUTER 
MARKETPLACE 


Will appear every 
THURSDAY 

For ail advertising 
information 

Please Telephone 
Simon Enefer 
01 873 3503 or 
01 407 5755 
Fax 01 873 3079 


Looking For 
PC Dealers 
In Germany? 


The 2nd edition of the 
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This detailed directory 
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For more details on print 
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please contact: 


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Telephone - 
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FINANCIAL TIMES CONFERENCES 


WORLD PULP & PAPER 
CONFERENCE 

Hotel Inter- Continental, London 
12 & 13 December, 1989 


The Financial Times ninth annual conference, to be arranged in association 
with the European Paper Institute, will review the changes taking place in the 
international structure of the business and corporate strategies for the 90a 
It will also analyse opportunities for international trade and investment as well as 
the impact of technology and innovation. 

Speakers include: 


Mr Carl G Bjomberg 

Central Association of Finnish 
Forest Industries 


Mr Adam Zimmerman 

Noranda Forest Inc 


Mr Hans de Korver 

CEPAC 


Dr Einar Bohmer 

Norwegian Pulp & Paper Research Institute 


Mr Friedrich Luhde 

International Finance Corporation 


Mr Peter Williams 

Reedpack Ltd 


Mr BoWergens 

Swedish Pufp & Paper Association 

M. Jean Paul Franiatte 

COPACEL 


Mr lan Kennedy 

The Wiggins Teape Group Ud 

Dr Francesco Sottrici 

SottridSpA 


Mr Rune Brandinger 

Sodra SkogsSgama AB 


Mr BemtLdf 

MoOch DomsjoAB 


Mr David Clark 

European Paper Institute 


Mr Jorge Nunez y Lasso de la Vega 

Torres Hostench SA 


A FINANCIAL TIMES CONFERENCE in association with the EUROPEAN PAPER INSTITUTE 


WORLD 
PULP & PAPER 
CONFERENCE 


□ Please reserve placets) 

Q Please send me further details of the 
WORLD PULP & PAPER conference 



A FINANCIAL TIMES 
CONFERENCE 


Confc ™"“ 0'S-*-** < 

Tel: 01-925 2323 Fax: 91-9252125 Tbc 27347 FTCONF G 


Name 

Position _ 
Company, 
Address- 


Post Cocte_ Courtiy. 

Tel Fax 










FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


PT Cement Cib/nong 
Building Indonesia 


PD 



f>T CEMENT ctBfNONEy established in 1971, is a leading 
cement producer in Indonesia and the first company to go public in 

August 1977. 

In 1989 we are investing over US$25 million on plant optimisation 
programs, including coal conversion to save about 40% on energy 
costs. We are currently undertaking a major expansion program 
which will increase production capacity from 1.5 to 3 million tons 
per year by 1992. 

Our strategy into the 1990s is to better serve the rapidly expanding 
building and construction activities of Indonesia, especially the 
fastest-growing markets of Jakarta and West Java. 







For a copy of our latest Annual Report please contact: 

The Finance Director PT Cement Cibinong PO Box 197/Jkt Jakarta 10002, Indonesia 
Telex: 481 16 CIBSEM IA Fax: (6221) 8198362/8193321 Phone:(6221)8190808 




FINANCIAL TIMES THURSDAY DECEMBER? ISg? 



They don’t! 




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Easy -transfers for an ever increasing number of 


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Raya) Dutch AfrSnes 




Regulation rules too detailed 


By Paul Nelson 

THE AMENDMENTS to the 
Financial Services Act (FSA) 
aimed at simplifying the inves- 
tor protection regime have 
become law in the 1389 Compa- 
nies AcL Unfortunately, they 


The SIB will lay down 10 

S ral “principles" of con- 
These wffl apply directly 
to all authorised firms. The SIB 
wfll also set oat 50 or more 
core rules, directly applica b le 


mm 







effectively the private investor. 

The reasons for this failure 
go to the heart of the FSA. The 
scope of the activities . to be 
regulated was too wide and 
resulted in a Secu ritie s and 
Investments Board (SIB) role* 
booh dealing with every con- 
ceivable circumstance. The sit- 
uation was made worse by the 
confusion in the legislation 
between market regulation and 
consumer protec ti on and com- 
pounded far problems of put- 
ting it all into practice. 

Having put together an 
extremely detailed ratebook, 
the STB interpreted strictly the 
requirement in the FSA for the 
mlebooks of the self-regulating 
organisations (SROs) to be 
“equivalent.” Some also argued 
that, because of the right of 
action for investors under sec- 
tion 62, firms must have their 
duties set oat in laborious 
detail 

The ratebooks often regulate 
the same subject matter m dif- 
ferent ways, leading to “regula- 
tory arbitrage.” They need to 
be harmonised to achieve con 1 
sistency. The structure of a SIB 
and five SROs (leaving aside 
nine recognised professional 
bodies) does not naturally tend 
towards consistency. 

Sim plificati on consis- 
tency cannot be wholly recon- 
ciled given the stru c t ure of 
so-called self-regulation. How- 
ever, the proposed changes to 
the FSA, as amplified by file 
SB’s August papa- setting out 
its preliminary views, attempt 
a reconciliation. 

The statutory system has not 
been radically overhauled (for 
example, to. meet the European 
Directives) along institutional 
rather tfam functional lines to 
separate banking, insurance 
and investment services. 
Instead, the' Government's 
amendments graft on further 
complexities. 


achieve “adequate” over-all 
investor protection! This will 
be judged on the investment 
business, the investors and the 
controls to which SRO mem- 
bers are subject 

Investors are art i n t ended to 
be able to sue for breach of the 
principles, only of file rules. 
Even then, only private inves- 
tors will have a right of action 
under section 62. 

The principles are expressed 
very generally. For example, a 
firm should “observe high 
standards of integrity and fair 
dealing.” The principles are 
not intended to give rise to a 
jp pij right of grftnn, but only 
disciplinary sanctions, which 
may be instigated by investors. 
However, principles as stan- 
dards for the whole industry 
having been laid down, it is 
possible that failure to comply 
with them may be proof of neg- 
ligence or proof of failure' to 
comply with an implied con- 
tractual term. This is worrying 
g i ven the obscure drafting of 
some of the principles and 
their generality. 

The SIB's proposed core 
rules suffer in a way. 

The principles and core rules 
alone would not generally be 
sufficient for an SRO to demon- 
strate “adequacy." Several are 
unworkable without sub-rules. 
Some - snch as file criteria for 
the contents of investment 
advertisements - expressly 
require compliance with 
AHaited sub-rules. 

From other core rales, 
exemptions -are required - for 
example, in cases in which the 
firm Is dealing with business 
and professional investors. 
Mo st- require am p u nnarinn and 
qualification to be tntnltigihl«. 

Thw I nvestmen t Mana gHiw n t 

Regulatory Organisation 
dmro) has stated that it does 
not agree with several core 
rules and there are indications 


... 

' '• •' ■-** 
• » , ; 

. -TV ' 


that other SROrart not at one 
with the SIB on their content. 

None the less, each word of 
each core rale will be directly 
applicable to the SROs’ mem- 
bers. The SRO’s rates give the 


think that this requires 

detailed rates. . 

The debate comes back to 
personalities. Ate the regula- 
tors and the regulated commit- 
ted to a 






fi B s 


should have regard to the costs 
of compliance. But* this provi- 
sion does not enable an SRO to 
omit a rate' needed for “ade- 
quate” Investor protection 
merely because compliance is 
too expensive, tt only enables 
file SRO to implement the 
rates in a less costly fosbion. 

The SIB alao appeal* to hove 
failed to give the SROs detailed 
guidance on what parte of the 
current ratebook* could be 
emitted 

The core' rates are' merely 
the existing SB*-- ratebook 
expressed more generally. Xt 
would be open to an SRO-to 
simply re-hash the whole of its 
current ratebook. This is what 
Tmm proposes in a draft rate- 
book pubashed in November. 

A zeal and committed simpli- 
fication would not'iecast each 
current rate as a sob-rate. The 
correct approach would be to 
cross out all rales which 
merely restate the. existing 
common law arufherstatntary 

iliittant nnH Him : fan pk n H m t a 

good number of ottos as codes 
of practice oar guidance: A 
breach of such a code of prac- 
tice or guidance would not be 
directly actfonahte under the 
amended FSA, though it could 
be treated as evidence of non- 
compliance with a principle or 
rule. 

Most of the remaining rates 
should then not be applied to 
HaaUnga with business and 
professional investors who 
could be expected to look after 
themselves. 

General bat accurate draft- 
ing of both core and sub-rules 
would irfmpHf y both. Indeed, 
the dear drafting of the core 
rales would probably make 
unnecessary many cf~1he sub- 
rates. 

Of coarse, since there are 
legal remedies -for breach of a 
rale It must be properly 
drafted. But it is an error to* 




the more difficult it becomes to 
determine what to do. Gear, 
accurate and general drafting 
is the answer. - - • 

But that pgea a ppoaeS a dear 
and aremria purpose in regu- 
lation.. It is posribte, though 
■ unlikely, that every rale, sub- 
rate, paxagrapfc.subwagraph 
and sentence in fire existing 
srp ratebook is aimed at a 
potential mtachfef which must 
be regulated. - 

The SIB must enunciate 
what really needs to be regu- 
lated and then .provide the 
leadership to see the work car- 
ried out Everything else 
should be jettisoned. This may 
require a sweeping c h a n ge of 
attitude. Alternatively, recent 
press comment, wwdtt suggest 
th at an S BGtype SEB may be 
emerging. ~ 

The Finandal Intermediaries 
Mon g ers and Broken Regula- 
tory Association <Fimbra) and 
the Lite Assurance ebh! Unit 

with fheir .existing ratebooks. 
The Secnrfttea Association has 
not yet published its own. . ... . 
•■■• Tmm views til this as no 
more than a drafting exercise 
fo recast its existing ratebook. 
Its new draft is store. logically 
ordered and in a more appro- 
priate format, ft. attempts to 
stive some existing probfenw 
and ambiguities - solutions 
which can be achieved, how- 
ever, under the existing provi- 
sions of the FSA. 

When the socalted “new set- 
ttement" is impfomented, every 
authorised firm will have to 
review its compliance proce- 
dures in detail. ft will not be 
worthwhile without substan- 
tial particularly- if. it 

all ha* to be done waln tro 
years taterwhen the European 
directives are fenptemeartea. - 

Tht author is a partner in 
Unklattrs & Paines. 


~ >' . 











THE BEST INVESTMENTS IN SOUTH AMERICA 
ARE MADE THROUGH A BANK WHICH CAN TUR1 
PRESENT DEBTS INTO FUTURE CAPITAL. 




Companies operating in South America often work 
with currencies whose exchange rates are under severe 
pressure. Oa behalf of its cfients, the ABN therefore seeks 
out new ways of obtaining the currencies needed for in- 
vestments! the most favourable rates possible. 

For example by performing swaps involving con- 
version of government debt So that cheats can in fact 
obtain new funds horn existing debts, with a substantial 


exchange rate advantage. Naturally such transactions 
demand alert responses, extensive local knowledge and 
a good relationship with (he Central Bank. Something 
which is made possible by the ABN’s network of almost 
WO offices spread over 44 countries. 

A network that enables the ABN to hold its own 
with the world’s major banks when it comes to providing 
advanced products and services. 


Hnougbout the world, therefore, renowned milt- Hus then is- the Arm foundation on which 'the 

tinationals and large local companies operating interna- ABNbuflds solid relationships with large numbers of intei^ 
tionafiy, avail themselves of ABN know-how. national enterprises. Becausea bank that knows the world, 

For day-to-day banking services such as electronic automatically becomes known throughout the workL 
banking and import and export payments, of course But 
particularly also for specffic projects, which may run hum 
leveraged-lease aircraft financing to co-generation energy 

projects. And from complex swaps to off-shore loans.- AWORLD OF UNDERSTANDING 



PAKISTAN, PANAMA. PARAGUAY. PEOPl^S REPUBLIC OF CHINA, SAUDI ARABIA. SINGAPORE. SPAIN. SRI LANKA, SURINAM, SWEDEN, SWITZERLAND, TAIWAN. TURKEY, UNITED ARAB EMIRATES. UNITED STATES OF AMERICA. URUGUAY. VRGm ISLANDS. HEAD OFFICE, 33 VUZBSTRAAT, AMSTERDAM, THE NETHBtLAMI&m&PHOra 










, J V« 


FINANCIAL TIMES THURSDAY DECEMBER 7 1989 






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CINEMA 

Poet of balmy incidentals 


ARTS 


“I feel a bit discombobulafed" 
says the Italian lady register- 
ing at a hotel fa Memphis, Ten- 
nessee. “Yes," says tie black 
receptionist, "rkndw thefcel- 

ing.” " * . •" ; ... .... 

We all do, after an boor of 
watching Jim Jarmusch's Mys- 
tery Train. As -Henry. James 
would -say: -Nothing, beauti- 
fully, happens. T elling - three 
related tales Sor tie price of 
one. Mystery Train is a sort of 
one-man Ni no York Stories gone 
sooth and gone scatty. 

Majestic in their plotles- 
s ness , Jarmusch’s films 
(Strangers bi Paradise, Doom 
By Law) feature drifters and 
oddballs intersecting hi nwi 
lated backwaters of the UsTlf 


dogstories.the shaggy dog 
muon would sue for slander. 
Mystery Train, like its Jar- 
musch forebears, is pica- 
resquely minimalist even by 
then- standards. In part one a 
young Japanese couple, fresh 
off the train, drift across Man , 
pbis practistog pidffln English 
and meeting weirofocala. In 
part two, a widowed Italian 
lady is “oHscombobolated" by 
Hfe, Memphis and the ghost of 
Elvis Presley. And m part 
three, a gang of fogtrive crooks 
hole np in the hotel which 
lodges aR three seta <rf charac- 
ters. 

Check your pulse at frequent 
fotervake «wm sure you are 
stm alive. So much na r rativ e 
becalmment can be d a nge rou s. 

Bat given time it can also 
steal over ypu. Jarmusch at 
best is a poet of balmy incident 
tala and the “drip-drip" of da&y 
life. Best episode here is the 
first, where a forlorn clownish- 
ness is wondrouaiy captured by 
actors Youki Kudbh and Masa- 
fcoshi Nagase, as they raise 
inconsequence to the level of 
high karma. A quarrel ova- the 
merits of Memphis and Yoko- 
hama t ra i n station s; a bleakly 
dotty conducted tour of the 
famed ?un Recording. Studio 
(“Please foam yourselves into a 
row" says the guide to the 
barely half-a-dozen visitors); 
much Beckettian non-sequitm- 
and mimetic bricolage (espe- 
cially with an acrobatic ciga- 
rette lighter); and a beautifully 

gnomic coda hi the hotaL 

Here theghtasks' thaboy 
why he-newer smiles. Tm very 
happy "he says,- unsmiling; 
“That's just the way my -face 
Is." The same with deadpan 
Jarmusch: tfs just the way his 
films are. If you love those 


to jrtudent' performers than 
Vr^s^ Dtm j^ariQ. Yet the 
Royal Northern College, pro- 
duction is an almost unanalit 

jaH teteTfrp i^ fjth COO- 

-vfetton: Md iMdiowinntinwii . 
from ifcstftolwfc fadeed one’s 
smdn -complaint' is that it is 
Dyn Garkb rather - than Don 
Cartas, auiK far Italian (the 188$ 
Modena eattfan) rather than 
tbb.;m^o^-Snvich. ■ choice 
that will- win .scant approval 


Ole Schmidt conducts, 
■gfritin janski directs and Rich- 
ard Marks furnishes thor- 
oughly naturalistic, often 
'-taajesiic sets; the costumes 
. have- been borrowed from Cav- 
eat Garden’s Visconti produc- 
tion of blessed memory, right 
down to EboU's eye-patch. 
: £verything looks and feels 
: r*ght. imd fa articulating such 
a vast time-span (over five 
" hours. Including Intervals) Jqn- 
/OgL lias concentrated senunldy 
on essentials, adding no frills 
'‘though mustering ample detail 


MYSTERY TRAIN 
Jim Jarnasda 

. COMICBOOK. 
CONFIDENTIAL 

V Ron Mam 

DRUGSTORE 
COWBOY 
Gas Van Seat 

EAT A BOWL OF 
TEA 

Wayne Wang 

CAT CHASER 
Abel Ferrara 


parts of your life in which 
"nothing" happens, you will 
enjoy squeezing the drops of 
concealed consequence from 
Mystery Train. Set in a town 
whose antique, exotic name 
belies Us pop-culture Ameri- 
canism, film’s w.rp t mes- 
sage is surely the efasteeness 
of that ww ta n Holy firati, the 
“American dream.” But do not 
expect revelation to be brought 
to you. Yon must seek It out 
yourself. If that sounds too 
much like hard work,- dip the 
mystery train and wait far the 
express. 

★ 

In other parts of America 
today, the streets are thU of 
people born in cartoon frames 
and talking in “speech bal- 
loons." They feature in Son 
Mann’s spiffing docume ntar y 
Comic Book Confidential. Maun 
rounds up the necessary sus- 
pects - condoetrip artists like 
Robert Crumb (“Fritz the 
Cat"). Jack Kirby (“Captain 
America”) and Art Spiegel- 
Truiim ("Mans”) — and quizzes 
them on their art A fizzing 
tour through, popular 
(deservedly popular) American 
culture. 

Nigel Andrews 


The gang of addicts in Drugs- 
tore Cowboy don’t simply steal 
money to suppor t their habits; 
instead they cut out the middle 
man and remove Hie drugs, 

from bnqrftnW «nH phflnmri^ 

themselves. Their ingenious 

wwHinHt of Hirfr g fHng atten- 
tion while they purloin the 
goodies provide the lighter 
moments of a bleak and 
TmwYmprmwtetng film in which 
the group of four, led by Bob 


(Matt Dillon) accept their 
addiction, and regard their 
raid 3 as their work. 

Beautifully shot, with the 
occasional tricksy extreme 
dose up - a room scene from 
inside a light bulb, the texture 
of a note pad under the pres- 
sure of a pen - the sombre, 
documentary style u n d er lines 
the mood of the plot; honest, 
and tmapdogetic- The charac- 
ters are objectively shown, 
shooting up or discussing a 

raid - not misunderstood, not 
romantic, but not complete vil- 
lains either, just frnmim beings 
given to go on running and 
iteaimp to feed their addiction. 
Their constant fli ght requires 
as iHnt»b effort as will Bob 
finally discovers to give up 
drugs. His decision turns his 
love story with his wife, 
Dianne, into a triangle, with 
drugs as th e_ irre sistible rival, 
winning bay him. 

The performances are 
remarkable, especially the 

often underrated Matt Dillon, 
Kelly Lynch as Dianne, and 
w illiam Burroughs as a 
d^frock ^ d , addicted priest who 
predicts. In 1971, the way in 
which fhture governments will 
use public fear of drugs as a 
political weapon. And director 
Gus Van Sant has gambled and 
won with his decision to con- 
centrate on reality at the 
expense of neat, fictional 
answers. The film’s determina- 
tion to be honest could have 
iiwn itg ih wi n fa n but, though 
there is an initial, deceptive 
aense of detachment created by 
his tr 0uhrumt J its hw pi*, inaM. 
ions and nnt to be forgotten, 
grows after the story ends. 

TTrrman nature of a gentler 
kind informs Wayne Wang’s 
Eat a Bowl of Tea. When 
relaxed immigration laws 
allow fiMwgan women to enter 
postwar America, newly mar- 
ried Ben Lay and Mei Oi (Rus- 
sell Wong and Cora Mlao) are a 
novelty in an ageing mate com- 
munity. The interferring old 
mm create so ipncb pressure 
for them to produce a baby 
that Be n Loir’s resulting impo- 
tence defeats their purpose. 
This is no langhlng matter for 
the couple, but one achieves a 

light, charming s orffll romwiy 

without undermining the deli- 
cacy of their problems. 

The heroine of Cat Chaser is 
rich, she wears expensive 
rfn+hpg But her rhir blonde 
hair is ostentatiously dark at 
the scalp. Is this a comment on 
her character, or does Kelly 



‘Dangerous Cowboy;' Matt Dillon and Kelly Lynch 


Me tiiTHa have a careless hair- 
dresser? May be getting to the 
root of the «gnifiRa«ra of her 
roots would highlight the paint 
of Cat Chaser too. instead , the 
characters in this thriller are 
so poorly established that even 
toe voice over narration, intro- 
duced to fill in tiie gaps in plot 
and motivation, is ineffective. 

The story, based on an 
Elmore Leonard novel, does 
offer some promisingly James 
M. Cain touches. There is 
Moran, woodenly played by 
Peter Weller, trying to run his 
Miami mntei and resist tempta- 
tion; some mysterious crimi- 
nals who naad hie help; Mary, 
the seductive, trapped woman; 
and her rich, corrupt. South 
American husband, De Boya. 
As Mary follows Moran on a 
rather arbitrary trip- to South 
America the narrator helpfully 
gr piama that though they have 
been giving each other toe glad 
eye for years, this is their first 


D on Carlo 


Welsh National Opera 


when iequi^^tjte auto da fa 
teems with Ufa , filling the 
stage 'to overflowing but never 
losing a focus, while, po chance 
is lost to underscore the shift- 
|ng loyalties of toe opera, in « 
glance or * gesture. - 
fa that he is reinforced by 
bfo principBl sfogara. who hare 
dearly worked at these roies 
imtQ. they have been absorbed 
fotojhdr very bones. On the 
first night on Tuesday Peter 
Roane singing Carlo was suf- 
fering from laryngitis; he 
struggled through one and a 
half aets then surrendered, 
walking through toe remainder 
of the opera while Ms lines 
were suns' from the pit by a 
young ex-RNCM professional 
CoHn McKexxachear. That inevi- 
tably diminished some of the 
ensemble work, but the vivid- 
ness of the surrounding perfor- 
mances scarcely allowed the 
tension to slacken: a marvel- 
lously gontafaed, mature Rod- 
rigo from David Etas, a voice 
stiff- to .gain some depth and 
character but absolutely 
assured on stage, thrilling, 
extravagant Eboli from Sara 


Fulgonl and intense, moving 
Elisabetta from Edith Prit- 
chard, whose singing showed a 
remar kable control of line and 
phrasing. 

That trio, as well as the Eng 
of Pavlo Hnnka and Grand 
Inquisitor of Andrew Slater, 
kept the core of the opera tight 
and always involving. The cho- 
rus, from the very opening of 
the Fontainbleau scene 
onwards, sang with great pas- 
sion; the opening of the auto 
da fa was positively buried at 
the audience. The orchestral 
playing did not falter, and 
S chmidt ’s knack of etching in 
woodwind detail brought con- 
stantly shifting perspective to 
the score, even if there were 
momenta when a little more 
recklessness, and less diffi- 
dence about ra mm i n g home 
dramatic points would have 
been useful A glorious evening 
then; ther e are further perfor- 
mances from Saturday 
onwards, if any tickets are to 
be bad. 

Andrew Clements 


DOMINION THEATRE 

Since 1979 the 
Amoco-sponsored visits to Lon- 
don of Welsh National Opera 
have been regular and highly 
valued. For much of the past 
decade, this has been the Brit- 
ish company likely to divine 
and pursue the new directions 
in opera, to provide stimula- 
tion and surprise in greatest 
quantity; and even now. when 
WNO appear to be going 
through a relatively lean 
period of artistic achievement, 
a week of performances at the 
Dominion was stiff something 
to be looked forward to. 

The London schedule is 
made up of recent, well-spo- 
ken-of revivals of Lucia and 
Bartered Bride, along with the 
new Freischutz production, 
which on Tuesday filled the 
opening slot. One hopes the 
WNO showings of Donizetti 
and Smetana will do something 
to disperse the gloom caused 
by their Weber, since Andr6 
Engel’s staging of the Great 
German Romantic Opera 
seems to me a complete turkey 
i - the charm, seriousness, 
charged atmosphere, and 
urgency of toe original have 



ARTS GUIDE 


EXHIBITIONS 


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The Wayward Gallery. The Other 
Story — an intriguing: but 
uneven survey o! the work In 
Britain since the war of artists 
rtr a am from cultures other t h an 
that of the western European 
trarfMcm- Dally until February 
4 , except bank holidays. 
Whitechapel Gallery. Michael 
afa lfeth - a retrospective 
of the sculptures, reliefs ami 
wall-drawings of one of Britams 
leading conceptual artiste unfell- 
ingjy m the demonstra- 

tion, though the Informing Ideas 
are more often of obvious and 
than profound. Doily until 
January 7 except Mondays an d 
Bank Holidays. 

Hie Barbican. A Golden Age 
- Art and Society In Hugary 
X896-1S14: in the light of the cur- 
rent ferment In Eastern Europe, 
with Hungary very much in the 
van. It is salutary to be r emin ded 
i Just how active a participant 
she was in the Enropean cultural 
i com m onwealth- Daily until Janu- 
ary 14 except December 24 and 
25. 


the inevitable wfcuiia and flint 
t oo ls wtfiing with finds from 
the Louvre foundations. Closed 
Tue. Late-closing night Wed. 
Ends Dec 31 (42895410). 

Musde des Arts Decora tife. Bohe- 
mian glass 1400-1989. Some 200 
exhibits, among - then thw fawiiHiii 
ruby -coloured glass, show how 
- having freed themselves from 
Venetian influence - the glass- 
makers of Bohemia carried the 
art of cutting and engraving and 
painting. 107, rue de Rivoll 
(42803214). Closed Toe, ends Jan 
28. 

The Lmzvre. Arabesques et Jar- 
dins de Paradis. The beauty and 
richness of nature is a leitmotiv 
which runs through Islamic art 
from Spain to imlia, from the 
8th to the 18th Century. Closed 
Tue, ends Jan 15 (40205317). 
Galerle d’Art Saint Honore. 
Lucretla. Setting off the white 
androse-coloured body against 
a deep black background, Lucas 
Cranach the dares to paint 
at the beginning of the 16th cen- 
tury In Luther’s town a disturb- 
ingly beautiful Lucretla. 267, 
tU6 Saint Honors (42601503). 
Closed Sat, Son and lunchtimes. 
Ends Dec IS. 


been thrown out, and abso- . 
lately nothing (other than an 
unhelpful New England set- 
ting) has been put in its place. 

This is a closely worked, 
finely integrated study in total 
negativity on the lyric stage: a 
set that means nothing, a 
libretto plodded through, a 
string of intelligent and 
responsive performers left to 
their own devices on the stage. 
Whatever the purpose of the 
production, its actuality is an 
even level of tedium that must 
have saddened anyone in Tues- 
day’s audience who knows and 
loves the work. 

This was in spite of knowl- 
edgeable conducting by Peter 
Hirsch - not exciting, per- 
haps, but well balanced and 
musidanly — and notably fine 
singing from Rita Cullis 
(Agathe) and the American 
tenor Joseph Evans (Max). The 
unfocussed tone of Phillip Joll 
as Kaspar raised another yet 
question-mark over the vocal 
condition of this enormously 
talented young singer. An 
evening best forgotten. 

Max Loppert 


designers. Onawl Monday, 

Dec 17. 

Madrid 

Ftmdadou Juan March. Retro- 
spective of Edward Hopper opens 
the autumn season at the founda- 
tion. 61 works by the New York 
realist covering a period of 56 
years. Until Jan 4. 


To the DGAA. Vicarage Gate House, 
arage Gate. London W84AQ Tel; 01-2299341. 
; Please send me, wfthoutpblfeatioo, free copy of ^ "Howto Make Your wm~ 


iName .1. 

i 

■Address 


Hosfe des Arts Decoratffe 3e 
sols le Cahler - Picasso’s sketch- 
books. After two £ mean- 

dering the world over, the exhibi- 
tion ends, aptly, in Paris. The 
40 sketchbooks coverin g a period 
of 64 years follow closely Picas- 
go’s development. 107, Rue de 
BlvdH (42503214), clOGed Tue. 
Ends Dec 31. , 

Grand Palais. Archaeology in 
France. The exhibition presents 
30 years erf discoveries with some 
3.000 ottecta. beginning with 


Europaha Japan 89: 

Kories Royaux d’Art et dTOs- 
toire. Nambam Art explores the 
Portuguese influence on Japa- 
nese painting and the Splendour 
oT No Theatre shows props and 
costumes from the Rokuro Ume- 
waka Collection. Closed Mon. 
Ends Dec 17. 

Antwerp 

Heasenlwis. 53 FaiconruL Japa- 
nese posters by 12 graphic 


Caixa de Barcelona. Raoul Dufy. 
Works by the French feuvist.weU 
known for his lively use of colour 
and interest In variedforms eg 
art, are on show in Spain for 
the first time. Ends Dec is. 

Hanover 

SprengBl Museum. Kort-Schlwtt- 
ero-Platz. Der blaue Reiter (The 
Blue Horse), this museu m is d is- 
playisg around 61 pieces from 
its own collections as well as 
some additional nainttngs on 
loan from East Germany and 
by Other artists who belonged 
to the same Munich-based group. 
Until Feb 11. 

Cologne 

Museum Ludwig, Btschofegarten- 
strasse L The most comprehen- 
sive retrospective on Andy War- 
hol, who died In 1987, with 
around 160 pieces from New 
York. 

Munich 

Stadtfachr Galerie im Lehmbach- 
baus. The most complete retro- 
spective of tbe expressionist 
painter Karl Schmidt -Rottiuff 
to date with almost 370 works 
from 70 private and public collec- 
tions. 


consummation. “Are you going 
to hold me or that bear* she 
asks breathlessly, and they 
grapple on the bed, giving the 
audience time to pander all 
those Cain higgles. Mary wants 
a divorce but De Boya is refus- 
ing to give her the amount 
named in their prenuptial 
agreement, “only $2m," she 
mourns. And not even a single 
indemnity. 

A few years ago Lawrence 
Kasdam borrowed a similar 
scene in Body Heat, and made 
it pay off with enormous suc- 
cess. Cat Chaser borrows with- 
out paying back, introduces 
the dements without fallowing 
fh<*m through adequately. Its 
titte refers to a nickname given 
to American soldiers in South 
America. Of course, a cat 
Chaser, like this film , ran also 

be a dog. 

Aim TotterdeU 


Coriolanus 

ROYAL SHAKESPEARE 
THEATRE, STRATFORD 

Even with the acceptable face 
of mob democracy baring its 
teeth in Eastern Europe at the 
mti of this astonishing year, 
the Royal Shakespeare Com- 
pany at Stratford-upon-Avon 
cannot make CortoUtrms sound 
like a play that really matters. 
This we must interpret as 
another indictment of Terry 
Hands's artistic directorship; 
stiff no news of who might suc- 
ceed him next year. 

The revival that opened an 
Tuesday, with Charles Dance 
returning to the company 
apparently under sufferance 
and certainly not for the 
money (as he informed the 

Daily Mail, therefore qualifying 

immediately as nasty enough 
tor the rede he once understud- 
ied here), is directed by Hands 

“with John Barton.” One most 

assume that Hands is responsi- 
ble for the hieratic, cokf neu- 
trality of Rome »wli ftif con- 
trasting soft red Arabic 
mustiness of Antium; while 
Barton has taken care o f the 
difficult and knotty verse. 

fa the middle, the soul of a 
play goes missing, fa a just 
about decent evening, the com- 
bination works reasonably well 
without defining any future 
pro s pec t s far the company or 
hidpM pp ti p rf pg memories of 

Barton’s own wooden primitiv- 
ist spectacle of 20 years ago 
with Ian Richardson as a gold- 
en-headed golden voice, or 
Hands's black leather apotheo- 
sis ten years later with Alan 
Howard as a self-obsessed solo 
turn, his best role. Dance was a 
glinting Aufidlus (and under- 
study) on that occasion. 

He still glints, with those 
blue eyes, that swishing ginger 
mane and Bensonian profile. 
And he has the lungs. But his 
performance is a series of 
demonstrative fahiranv not an 
account of the journey of a 
contemptuous political soul in 
the wilderness of public disap- 
proval The spur is vanity, 
whether be appears bloodily in 
ghostly hwif - iigiit sabre flash- 
ing in the sun on "Make you a 
sword of me;” or peddling 
patently false rhetoric in the 



Barbara Jefford and Charles Dance 


“for your voices" speech; or 
hurling a table across the 
forum on “you common era of 
curs,” ripping off the white 
senatorial tunic d> p«rriny 

in a huff to the world else- 
where, the political opposition. 

The interpretation is pitched 
on one note of obtuse disgust, 
which makes it easier for the 
peerless Barbara Jefford to 
iindprminp hia ascenden cy as 
the beseeching Volumnia at 
the gates of Rome. Miss Jefford 
heads a formidable triumvi- 
rate, her ferocious termagant 
well supported by Amanda 
Harris's broken Virgilia and 
Jane Maud’s haughtily reli- 
gious Valeria. But what really 
catches the RSC out here is the 
awfulness of the rhu barbing 
crowd, its phoney choreogra- 
phy, terrible bit part playing 
and predictable reactions. 

The tribunes are made noth- 
ing of by Joe Melia and Geoff- 
rey Freshwater, who walk up 
and down a bit and tremble in 
their shoes. Apart from Miss 
Jefford. the major contribution 
is made by Malcolm Storry as 
Aufidius. a skinhead killer 
whose twists and turns of con- 
science are for once more inter- 
esting than those of Corio- 


lanus. And Joseph O’Conor is a 
wonderful, if unsurprising, 
Mcnenius. 11m box-like design 
of Christopher Morley contains 
three meaningless towers, one 
of them mobile and covered in 
bronze reliefs. 

Modern Interpretation has 
imposed a homo-erotic symbio- 
sis on the warring protagonists 
(as with lan McKellen and 
Greg Hicks in the Peter HaU 
National Theatre version), but 
none of that here. The clash of 
titans is without a him of rec- 
ognition or embrace, and the 
play is weaker as a result 

The final family pleas are 
conducted in a high-tech cano- 
pied arena, Dance dinging to 
Jefford for 20 seconds before 
cracking, another reaction 
based in neither psychology 
nor temperament He is stuck 
like a pig in tire back by Aufl- 
dius’s knife, after a brief and 
public torment, and carried 
from the stage face and gleam- 
ing torso open to the skies. 

One feels that rehearsal time 
has gone into that rather than 
any discussion on how the play 
relates to the artists Bn< ^ nwi»* 


audience. 


Michael Coveney 


OBITUARY 


John Pritchard 


John Pritchard, who has died 
in San Francisco at the age of 
68, was raw of the leading fig- 
ures in British winairal tifp of 
the postwar period: perhaps 
Britain's most widely travelled 
conductor, certainly, in the last 
two decades, one of its busiest 

He his mark in 
every branch of musical life, 
lljough first brought to public 
attention as an operatic con- 
ductor at Glyndebourne - 
which for three decades 
remained his artistic home — 
Pritchard was a familiar figure 
on the concert podium, 
whether as chief conductor erf 
the Royal Liverpool Philhar- 
monic (1957-63), the London 
Philharmonic (1962-66). or the 
BBC Symphony (1979-88). 
While it may not be true to say 
that he bestrode the British 
mmdefll seen** as did, in their 
different ways, a Beecham or a 
Boult, his astonishing natural 
musicianship, versatility, and 
willingness to tackle a wide 
repertory, from Monteverdi to 
Stockhausen and taking in an 
enormous number of first per- 
formances, kept him in the 
forefront of this country’s 
musical activities throughout 
his career, 

Pritchard, the stm of a pro- 
fessional violinist, had his first 
success as conductor of the 
Derby String Orchestra 

(1943-45). After the war he 

joined Glyndebourne as a repe- 
titeur, soon becoming chorus 
master and eventually ass Is- 


December 1-7 


Vienna 

Museum tar Apptted Arts Is host- 
ing a large exhibition devoted 
to the works of Carlo Scarpa, 
the Italian artist and architect. 
The theme Is focusing on “The 
Other City”. Until Jan 15. 

New York 

Mrfmnnhtan Wn«iWW A iteraite 

of fabulous shows borrowed from 
around the world culminates 
In the present exhibit of the 
major works of Velazquez, much 
of which is bor r owed from the 
Prado in Madrid. Ends Jan 7. 


Wa sh in g ton 

National Gallery. Almost three 

dozen pai nting s of the ea rly 20th 
century German movements, 

Banhaus, Neue SachUchkelt »nd 
Blaue Reiter, tent by the Thys- 
sen-Brnsfiffifeza collection, make 
a tefligg commentary on a part 
erf the world again at the centra 
Of attention fateraatiraially ffinrtu 
Jan 14. 

Tokyo 

Idemitsu Museum. Flowers of 
Edo. Paintings «nii prints of flow- 
ers from the Edo Period repre- 
sent a new flowering in Japanese 
art. Influenced both by new 
trends in the decorative arts of 
China and by the botanical illus- 
trations of Europe. 

Odakyu Gallery (Odakyu Depart- 
ment Store) Shlnjuku. Elyumlzu 
Temple Exhibition. The temple, 
founded In 778, is <me of the most 
popular in Kyoto and has a 
superb col l ec tio n erf Buddhist 
images and paintings. Ends Dec 
10 . 


tant to Fritz Busch - it was as 
a result of the senior conduc- 
tor’s sudden indisposition dur- 
ing a 1949 festival performance 
that he TT^adp his conducting 
debut there. In the final stages 
of his Glyndebourne associa- 
tion be was musical counsellor 
(1963-68) and musical director 
(1969-78); Pritchard's reputa- 
tion as one of the world’s lead- 
ing conductors of Mozart opera 
was intimately bound up with 
his experience of and in the 
Glyndebourne theatre, and 
came to a climax in the Mozart 
productions - Figaro (1972) 
and Don Oiovanm (1977) - on 
which he collaborated with 
Peter HalL 

But his peculiar gifts in Ros- 
sini and the Italian bel canto 
composers, which may have 
been developed under the tute- 
lage of another great Glynde- 
bourne figure, Vittorio Gui, 
were no less remarkable; in 
recent years it was via Bellini 
(a new production of Norma, 
1987) and Donizetti (revival of 
Lucia, 1988) that Pritchard 
maintainAd links with Covent 
Garden, a theatre fa which be 
had regularly appeared since 
1952, and where he had taken 
charge off the premferes of Brit- 
ten’s Gloridna and Tippett’s 
Midsummer Marriage and King 
Priam. His vast experience fa 
the field of opera gained him 
chief conductorshlps in the 
theatres of Cologne, Brussels, 
and San Francisco. 

Pritchard was a conductor 

SALEROOM 


admired by orchestral musl 
clans everywhere. He was a 
famous "quick study," who 
could solve difficulties of scor- 
ing and balance with an 

insider ’s understandin g; like- 
wise, his sympathetic approach 
to instrumentalists and singers 
(be was much depended-on by 
sopranos from Jurfaac and Cal- 
las to Cotmbas and Te Kan- 
awa) lent him particular 
renown as an accompanist. In 
spite of all this, it was not 
invariably the case that a Prit- 
chard performance would be 
characterized by energy - a 
certain ind o l e nce of manner 
could make itself felt, and viti- 
ate the In telli g en ce and fluency 
of bi» musto - makln g. 

But no-one who had the good 
fortune to bear him on an “on” 
night is likely to forget the 
experience: the present writer 
has particularly happy memo- 
ries of outstandingly fresh, 
buoyant, and gracefully 
phrased readings of Cost fan 
tutte, Figaro, and Strauss’s 
Capriccio and Intermezzo at 
Glyndebourne, of Bellini’s 
Capuleti at the Proms, and of 
Chaikovsky symphonies (the 
earlier ones) at the Festival 
Hall. Pritchard was a culti- 
vated man. a bon vtveur, and a 
genial conversationalist, with a 
fine line fa Mgnding humo ur 
and indiscretion. He was ma de 
a CBE in 1962, knighted fa 
1983. 


Max Loppert 


‘Blue Page * makes £l.lm 


Not all the big art collectors 
around 1900 were rich 
Americans. Joseph Robinson 
(he was later knighted) was a 
South African diamond 
millionaire who bought Dudley 
House fa Park Lane fa the 
1890’s and started to fill the 
vast picture gallery with 
choice Old Masters. He tried to 
sell them fa 1923 but on the 
night before the auction fell in 
love with them a gain, raised 
the reserves, and kept most 
They are now being sold by 
his descendants and a group of 
nine went for £14,767,500 at 
Sotheby's yesterday. The most 
famous was probably 
Gainsborough’s “The Blue 
Page," one of three famous 
paintings of boys fa cavalier 
costume in the style of Van 
Dyck - the others are the 
“Blue Boy" and the "Pink 
Boy.” It sold yesterday for 
El.lm, slightly below forecast, 

S erhaps because there are 
oubts as to whether the 
background was completed. 

There were no doubts about 
the top lots, two Florentine 
panels painted fa 1487 to 
celebrate the union by 
marriage of two great banking 
familie s - those of Tomabuoui 
and Albizzi. They were 
destined to hang in the bridal 
chamber. One showing the 
Argonauts in Colchis is 
credited to Bartolomeo di 
Giovanni and sold for £5.06m, 
double its estimate. The other, 
the departure of the 


Argonauts, attributed to “The 
Master of 1487“ made £4^2m, 
comfortably above forecast. 
Both are fa superb condition. 

A Murillo, “The vision of St 
Francis of Paola" was within 
estimate at £1.485x0, while 
Agnew paid £924,000 for “An 
elegant couple fa an interior" 
by the 17th century Dutch 
artist Eglon ven der Neer 
another Lon don dealer, 
Noortman, £770,000 for “A calm 
sea" by an artist of the same 
place and period, Jan van 
Cappelle. Outside of the 
Robinson pictures, a still life of 
flowers by Jan Brueghel the 
Younger sold for £1.012m as 
against a top estimate of just 
£180,000. 

At Christie’s silver made 
£915,013 with 13 per cent 
unsold and medieval 
manuscripts £980,056, with 4 
per cent unsold. Brand Ingles, 
the London dealer, paid 
£143,000 for a George IV silver 
gilt mounted lapis lazuli cup 
and cover. It was originally 
estimated at £L500 but then ft 
was noticed that the handles 
formed the crest of William 
Beckford. which accounts for 
the rise fa price. Christie's had 
sold It at toe Hamilton Palace 
sale fa 1882 for £782 IQs. 

Among the manuscripts a 
New York dealer gave £308400 
for a Book of Hours with many 
miniatures, produced in 
Bruges around 1500. 

Antony Thomcroft 


market 

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reepfld;- 

of 

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■”-* sur* 

i coun- 
ti - 
i'-ur..,-, 
rs or 
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Four 



T 


FINANCIAL TIMES 


NUMBER ONE SOUTHWARK BRIDGE, LONDON SE1 8HL 
Telephone: 01-873 3000 Telex: 922186 Fax: 01-407 5700 


Thursday December 7 1989 


The building 


of Europe 


THE MEETING of the 
European Council this week- 
end has been described by 
President Francois Mitterrand 
as “a turning-point for our 
Community's fixture." That is 
perhaps an exaggeration. The 
Community is a large vessel 
and turns slowly: this will be 
merely one point on a broad 
curve in its course. 

What is true is that Europe 
as a whole is at a turning 
point, thanks to the rash of 
democratic revolutions sweep- 
ing across its eastern half. 
Most people in the Community 
agree with President Bush that 
these events call for “a contin- 
ued, perhaps even intensified, 
effort of the Twelve to inte- 
grate,” but there is disagree- 
ment between those who 
believe the intensified effort 
should tairn the form of moving 
foster on the EC’s existing 
agenda, including economic 
and monetary union (Emu) and 
the Social Charter, and those 
who argue that the urgency of 
those particular items has 
diminished. 


Misguided declaration 

The Social Charter, a well-in- 
tentioned but misguided decla- 
ration of principles, will be 
adopted in Strasbourg with 
Britain’s strongly registered 
dissent but probably without 
much further discussion. More 
important, but now virtually 
certain, will be the decision to 
rail an inter-governmental con- 
ference, starting probably a 
year from now, to "lay down 
the subsequent stages” for ach- 
ieving Emu, following the 
launch of stage one on July X 
(as agreed by the Madrid sum- 
mit last Jane) - it being 
understood that these subse- 
quent stages will require a new 
treaty. Britain will vote against 
this decision, but win take part 
in the conference, as it did in 
the previous one which drew 
up the Single European Act 
The important question to be 
settled in Strasbourg is how 
the mandate for the conference 
should be defined. Emu will be 
at the head of the agenda, but 
there is a strong case for 
including other matters too. 

Emu as conceived by the 
Delors Report requ i res a treaty 
because it will involve setting 
up at least one new Commu- 
nity institution (a European 
central bank) and transferring 
new powers from member 
states to the Community. As 
Mr Delors said last weds, this 
extension of EC powers will, 
“pose two problems: that of the 
effectiveness of its executive 
(and which executive?) and 
that of democratic control, tak- 
ing account of the coexistence 
of national parliaments with 
tiie European Parliament." 

In fact these two problems 
are posed already, and one 
could well argue that a treaty 
would be needed to deal with 
them even if Emu were not on 
the agenda. The first problem, 
that erf the executive, is high- 
lighted by the crisis in eastern 


Cession of powers 

The second problem is the 
“democratic deficit” - the loss 
of effective popular sover- 
eignty resulting from the ces- 
sion of powers by directly 
elected national parliaments to 
a Community whose legislative 
body is the Council of Minis- 
ters, and whose executive is an 
appointed Commission. The 
case for correcting this deficit 
is already strung, and a further 
transfer cf powers will make it 
overwh elming . That means 
strengthening the powers of 
the European Parliament, but 
could aim mean, as Mr Delors 
hinted, greater involvement of 

national parHanwnbi, perhaps 

through the creation of a sec- 
ond diamber. 

A third problem, not directly 
related to Emu, is the “subsk 
diarity” principle, meaning 
that the Community should 
only concern itself with mat- 
ters which, because of their 
cross-frontier implications, 
cannot be left to national dis- 
cretion. Frequently dted by Mr 
Delors but far from consis- 
tently applied, this principle is 
in urgent need of codification. 

An intergovernmental con- 
ference will be well worth hav- 
ing if it addresses all those 
problems and so endows the 
Community with a set of insti- 
tutions enabling it to deal 
e ff ectively with the problems 
of the 1990s. 


Strong case for 
embryo research 


TODAY BRITAIN’S House of 
Lords holds the first debate on 
a controversial measure, the 
Human Fertilisation and 
Embryology Bill. Peers and 
MPs will have a free choice 
between two alternative 
clauses: one bans all human 
embryo research; the other 
allows experiments to take 
place on embryos up to 14 days 
after conception, under the 
control of a statutory licensing 
authority. 

People on both sides of the 
argument agree that legisla- 
tion is long overdue. Ever 
since the 1984 Wamock Report, 
doctors and scientists working 
with embryos have wanted the 
protection of a clear legal 
framework to carry out what 
they see as important medical 
research. Their opponents 
believe that human life is 
sacred and that it begins at the 
moment of conception; there- 
fore any embryo experiment is 
immoral, whatever the future 
benefits for humanity. 

The scientific and medical 
professions are almost unani- 
mously In favour of controlled 
embryo research, not because 
they are disrespectful of life 
but because there are good sci- 
entific arguments not to regard 
embryos up to 14 days old as 
miniature human beings. The 
majority of embryos fail to 
implant in the womb and 
therefore die naturally before 
reaching the 14-day stage. The 
embryo at that stage is still a 
microscopic group erf undiffer- 
entiated cells; it is not yet clear 
which cells are going to grow 
Into the brain, limbs or guts 
and which will become the pla- 
centa linking the foetus to the 
womb. 

Once those arguments are 
accepted, it is hard to refect 
the scientific methods which 
have recently become available 


to do embryo research. The 
promised benefits Include: 
improved zn vitro fertilisation 
(IVF) techniques; diagnosis erf 
serious genetic defects in 
embryos before implantation; 
better treatment of infertility; 
new ways of preventing mis- 
carriages; and development of 
safer and more effective con- 
traceptives. 

In the absence of legislation, 
all embryo research been 
controlled by a voluntary licen- 
sing authority jointly spon- 
sored by the Medical Research 
Council and the Royal College 
of Obstetricians and Gynaecol- 
ogists. The authority, chaired 
by Dame Mary Donaldson, has 
worked valiantly to inspect 
Britain’s 38 IVF and embryo 
research centres and ensure 
that they follow the appropri- 
ate ethical and medical guide- 
lines. It would be a good model 
for the new statutory body. 

Parliament should decide qxl 
embryo research on its own 
merits and resist the efforts of 
pro-life MPs to amend the Mil 
to reduce the present 28-week 
limit on abortion. There is a 
good case for fixing a new limit 
of 24 weeks but the Govern- 
ment should achieve that by 
Introducing separate legisla- 
tion. The medical and ethical 
arguments about abortion in 
late pregnancy are quite differ- 
ent from those surrounding the 
treatment of embryos a few 
days old. 

If parliament disregards the 
scientific evidence and .votes 
on a wave of pro-life emotion 
to haw hu m ? " embryo experi- 
ments, many researchers will 
be tempted to move abroad. 
Today the House of Lords has 
the opportunity to set a suit- 
ably dispassionate tone for the 
debate, before the bill reaches 
the more emotive atmosphere, 
of the Commons. 


C hanges in the world's 
currency stakes have 
been spectacular in 
the last few months. 
The worry that existed as 
recently as September about 
an over-strong do fiar has disap- 
peared. The Bundesbank's 
desire for a recovery in the 
D-Mark has been more than 
f ulfille d; but the weakest cur 
rency of the top three has been 
the Japanese yen. 

Although the dollar is well 
and truly off the boll, it is by 
do means as weak as a compar- 
ison with the D-Mark alone 
would suggest. The US cur- 
rency is comfortably within 
the shadowy Group of Seven 
ranges, which still lead a half- 
existence. The D-Mark is, how- 
ever, the star performer, hav- 
ing recovered all the ground 
lost in the last two years. 

The trade- weighted indices 
confirm that the yen has fallen 
even more than the dollar. The 
yen inrfgx has fallen by nearly 
15 per cent since the peak of 
last winter and has lost an the 
ground gained since the 
autumn of 1987. The dollar 
index, by contrast, is still up 
on two years ago. Bat in view 
of the brisk running down of 
the Japanese trade surplus, 
other Group of Seven members 
are unlikely to object to yen 
depredation, so for at least 
In the short term, the most 
important influence on cur- 
rency movements may indeed 
be the relative tightness of 
monetary policy. In the long 
term, comparative movements 
in purchasing power for inter- 
nationally traded products - 
and perhaps for capital assets 
too - are what really count. 
More fleetingiy, in the medium 
term, the current balance of 
payments can be important, 
especially if it is the focus of 
media obsession. 

The rfiiwh in the D-Mark is 
partly explained by the rise in 
German Interest rates. But 
German interest rate increases 
- past and prospective - are 
themselves symptomatic of 
something much more basic. 
And interest rate explanations 
do not fully account for the 
ifprliwfl of the yen. 

One ingenious theory, eman- 
ating from David Hale of 
Kemper Financial Services, 
attributes the yen’s decline to 
a desired Japanese capital out- 
flow exceeding the country's 
savings surplus. Because Japa- 
nese internal capital markets 
inflate asset values, while dis- 
couraging takeover bids, Japa- 
nese investors are increasingly 
looking abroad. As a result, the 
US current deficit can now eas- 
ily be financ ed without chasing 
hot money by means of high 
interest rate differentials. But 
Hale is worried that the yen’s 
depreciation will continue 
until it threatens US competi- 
tiveness and thus relations 
between the two countries. 

Sterling hardly comes into 
top league discussion. If it did, 
it would came last. For after a 
fairly stable performance for 
several years ft has been deter- 
iorating a larmingly in recent 
months and weeks. In 1966, 
1988 and for most of 1989 its 
trade- weighted index averaged 
around 92 (there was an 
upward lurch to 95% in 1987). 
But it is now neatly seven per 
cent below the 92 benchmark; 
and forward rates and interest 
deferential^ suggest a similar 
foil in the year to come. 

The British Treasury has 
lost no f ire in taking advan- 
tage of Nigel Lawson’s depar- 
ture to disclaim any special 


Europe, where the EC is called 
cm to react decisively to a fast- 
moving series of events - in 
fact to behave like the major 
power it Is and to conduct an 
appropriate foreign policy. Its 
role was recognised by the 
Group of Seven summit in July 
which entrusted the Commis- 
sion with the task of co-ordina- 
ting aid to Poland and Hun- 
gary from the West as a whole. 
Yet the Commission probably 
has fewer qualified staff avail- 
able for such a task than any 
one of the 24 national govern- 
ments involved. Moreover a lot 
of confusion and time-wasting 
is caused by the ragged divi- 
sion of responsibilities between 
the EC as such and the Politi- 
cal Co-operation machinery, 
and within the EC between the 
Commission, the Council of 
Ministers and the presidency, 
with the latter shifting from 
one national government to 
BiwitTw every SIX mnnthB- 
Constructive suggestions for 
overcoming these problems - 
some requiring treaty revision 
while others could be adopted 
straight away - were made in 
a paper presented in Brussels 
last week by Mr Henri Fro- 
ment-Meurice, a former French 
ambassador to Bonn, and Mr 
Peter Ludlow, director of the 
Centre for European Policy 
Studies. If the British Govern- 
ment wishes to prove that its 
hostility to the Social Charter 
and the Delors Report does not 
reflect any Of awt.'hnaiam'n 
for European political integra- 
tion, it could submit these 
ideas to the summit 


ECONOMIC VIEWPOINT 


A win for 


Germany 


By Samuel Brittan 


The Mg three currencies 


Yen per $ ^ |£= 

160 M.:"; V'V'. -v* • ,w.r-vs SB mmm 


lao 




D-Mark per $ 

2.0 sw-r, -a 



SSGR 

Wi 


Yen per D-Mark 




L -- a j. Ji-xm ... x.m.T 
(hiluja TTijDjpWD 





interest in sterling’s rate 
against the D-Mark. But this 
will not wash. For currencies 
linked to the D-Mark, either 
via the European Monetary 
System or more Informally, 
account for nearly 60 per cent 
of the trade-weighted average. 

The fact that the UK should 
have combined a severe tight- 
ening of monetary policy dar- 


ing the last year, relative to 
other countries, with a nasty 
downward lurch in sterling is a 
severe thumbs-down signal 
from the international mar- 
kets. It may well reflect the 
longer-term inflation prospect 
and not just the balance of pay- 
ments red ink. 

The syndrome of expected 
depreciation, high inflat ion 
-and high ytnmi)n«l interest 
rates is unlikely to he reversed 
by any mechanistic monetary 
or fiscal gestures, but will need 
a dear si gnal that the Govern- 
ment has been forced to take 


cesses. First, there is the 
migration of East Germans, 
and ethnic Germans from fur- 
ther afield, into the Federal 
Republic. These Inflows are 
expected to reach nearly 
700,000, or well over one per 
cent of the existing population, 
in 1988. Second, the accelerated 
growth of the East German 
economy will occur as a result 
of injections of West German 
Capital and managements irre- 
spective of the exact political 
relationship between the two 
parts of the country. Popular 
German pressures are .how- 
ever, moving ineluctably 
towards reunification, whether 
the foreign policy establish- 
ments of the world like it or 
not 

The CSFB authors avoid the 
politics. Their point is that, 
although the balance between 
immig ration to the west and 
accelerated growth in the east- 
ern parts of Germany is dtffi- 


German monetary policy should 
adjust to the D-Mark becoming 
standard throughout Germany 


the exchange rate seriously. 

If we turn from sterling to 
the star-performing D-Mark, we 
need to go beyond rising Ger- 
man interest rates to a phe- 
nomenon which has been aptly 
labelled, the Economics of Ger- 
man Reintegration, in a new 
paper by Credit Suisse First 
Boston. 

The word reintegration cov- 
ers at least two different pro- 


cult to predict and is likely to 
fluctuate, tiie two are partial 
substitutes for each other. It is, 
therefore, possible to say some- 
thing about their combined 
effects. 

They suggest that the elimi- 
nation of the discrepancy 
between output per head in the 
two parts of Germany, will 
require an increase of 1 per- 
centage point per annum in the 


The Scans get 
together 


Observer 


m One development that is 
proceeding almost as quickly 
as German reunification is the 
consolidation erf the Scandina- 
vian banking sector. Six big 
mergers have been announced 
this autumn, the latest expec- 
ted to be unveiled today in 
Sweden between PKbanhen 
and Nordbanken. 

Suddenly, Denmark has two 
hi g hanks claiming almnst SO 

per cent of the market, with 
Copenhagen Handelsbank 
merging into Danske Bank 
and Privatbanfcen. SDS and 
Andelsbanken forming UNI 
BankDamnark. 

In Norway, two of the coun- 
try's three top banks, Den 
norske Credithank and Bergen 
Bank, have created Den norske 
Bank. And three of Sweden’s 
major banks are swallowing 
up the regional ones, with 
Gotabanken consuming Werm- 
landsbanken and Skaraborgs- 

hsmlcon | TTsmdpIshwnkpn digest- 
ing Skanska Bantam, and 
PKbanken partaking of Nord* 

hankflai- 

The reason for this flurry 
erf activity is plainly 1992. Scan- 
dinavian hanks are small by 
European standards and tradi- 
tionally have been 
stay-at-home types, but they 
fear that they are foiling 
behind. Moreover, the strict 
regulations that have shackled 
banking activity are being 
eased as the Scandinavian gov- 
ernments adhere more to EC 
policy guidelines. 

There are opportunities as 
well as threats, as the Scandi- 
navians see It. The opportunity 
Is for their banks to expand 
abroad in the wake of tiie 
region’s numerous m ultina- 
tionals. The consolidation that 
is taking place in the domestic 
markets is likely to be only 
a preliminary step to the estab- 
lishment of several Nordic 
megabanks that could compete 
an an equal footing with the 
European giants. 

The threat is thpf it is 
already too late. The Scandina- 
vian banks could became tar- 


gets for foreign takeovers. Seen 
in that l ight, the shake-up in 
Nordic banking could be 
mainly a defensive move. 

One Stockholm banker con- 
fesses that he fears waking 


up one morning and finding 
that his bank has been trans- 


that his bank has been trans- 
formed into the Nordic branch 
of Deutsche Bank. 


Socialist perk 



years at Prudentlal-Bacfae. 
Boro in Hertfordshire and edu- 
cated at ADeyne’s School in 
Stevenage, he took an MSc in 
economic with distinction 
from London University. 
Before he entered the City his 
reputation lay in football and 
badminton. 


Good question 


■ A London stockbroker tells 
us that he was staying in a 
remote part of the Mekong 
Delta dose to the Vietnamese 
border with Cambodia. The 
rate for a room in the hard cur- 


rency hotel was $26 a night, 
but the stockbroker discover 


I \&32.38m\ 

mp 


■ Nothing lik» an intrig uing 
title. Edouard Balladur, the 
former French Finance Minis- 
ter, will lecture at Chatham 
House next Tuesday on; “Gan 
we bufid in the '90s the Europe 
we dreamed of in the ’50s?". 

He will be speaking after thiB 
weekend’s European summit 
in Strasbourg, which might 
tell us some of the answers. 


but the stockbroker di sc overed 
that there was a special rate 
for people from socialist coun- 
tries. He explained that be 
lived in the London Borough 
of Camden, which is for more 
socialist nowadays than most 
of Eastern Europe. His rate 
was reduced to $ 1 & 


“I think I left my 
fingerprints on my spotted 
ballot paper.” 


No sweeteners 


Still nuclear 


■ There is supposed to be a 
Government ban on the con- 
struction of new unclear reac- 
tors in Britain. Christopher 
Hq yrHng , chairman nf state. 

owned British Nuclear Fuels, 
does not believe it. 

BNFL operates Britain’s old- 
est nuclear stations, Calder 
Hall, generating for 33 years, 
and Chapelcross, 30 years. Last 
year it earned £55m from elec- 
tricity sales. It is midway 
through a feasibility study to 
see what it might replace them 
with, in order to continue as 
a commercial nuclear electric- 
ity supplier. 

BNFL stresses that it is con- 
sidering only commercially 
proven reactor types, which 
tends to narrow toe field to 
just one - the pressurised 
water reactor. But surely the 
Government has justdedared 
a mor ato r iu m on FWRs after 
Sizewell B? 


Barfing says confidently 
that he plans to continue the 
study - "and I have govern- 
ment support" - for comple- 
tion nevt summer. He thinta 
that tha nuclear industry 
establish that nuclear power 
is economic, despite recent 


Smart move 


■ The resignation yesterday 
of John Reynolds, economist 
at Prudential-Bacbe Capital 
Funding, to join County Nat- 
West as market strategist and 
associate director next month 
shows that movements in the 
City are still going on. 

The 29-years-old Reynolds 
will work in tandem with Bob 


Semple, County's market strat- 
egist, and could be a foil direc- 


egist, and could be a foil direc- 
tor of the securities arm of the 
bank within a year or so. 

County NatWest was not 
the first to seek his services. 

A few weeks ago Reynolds was 

approached by Nomura Inter- 
national, the London arm of 
the Japanese securities giant. 

He has established a wide 
rangeof contacts in his four ■ 


■ British Aerospace, which 

winning other nlnlmw to fama 

is the British company with 
the biggest public affairs pay- 
roll, has apparently gone into 
hiding after the disclosures 
about the terms of its takeover 
of Rover. 

The group’s pre-Christmas 
press reception at Its headquar- 
ters in the Strand was to have 
taken place yesterday. This 
Tin* htwimp g. famntiB annual 
affair. Aerospace journalists 
are said to spend weeks 
looking forward to It 

The party was called off at 
the last moment yesterday. 

The corporate h ead q uarters 
press office, which tops a 68- 
strong list of BAe public affairs 
people, was jointly unavailable 
in a meeting most of the after- 
noon, but a secretary said she 
Vinri been told the wnrallartinn 

was “due to events that have 
happened.” The company is 
planning to hold the event 
lata-, when it hopes the dust 
will have stifled. 


Keep going 

■ Sign seen in a London 
school: "The End of History 
may be at hand. The end of 

algebra is not” 


FINANCIAL TIMES THURSDA Y DECEMBER ? 1999 


combined growth rates of the 
two parts of the country. 
About half of this extra growth 
might occur in the west, under 
the stimulus of immigration, 
and about half in the east. 

The immediate effect might 
be to raise the 1990 growth rate 
in the Federal Republic to 4 per 
cent, compared to 2 ‘A per cent 
expected only a few months 
ago. The CSFB authors sug- 
gest, moreover, that demand 
will rise more than potential 
supply. For the new immi- 
grants will consume more than 
they earn and extra invest- 
ment will be required to pro- 
vide them with Industrial and 
social capital. Because much of 
the extra demand will be con- 
centrated on housing and land, 
only limited relief can come 
from run n in g down the bal- 
ance-of-payments surplus. 

Thus, even if the Bundes- 
bank raises both its estimates 
of potential real growth and its 
money supply targets, the 
Lombard rate will still have to 
rise from 6 per cent to at least 
9 per cent and probably more 
next year. A more fundamental 
point, which hardly anyone 
has yet discussed, is how Ger- 
man monetary policy should 
adjust to the prospect of the 
D-Mark becoming the de facto 
means of payment «nH stan- 
dard of value throughout Ger- 
many. 

The arrival of a flexible and 
mobile labour force Is likely 
over a longer period to wear 
down union influence and 
weaken corporative nationwide 
collective bargaining in the 
Federal Republic - just as 
HOQg Kong immigrants would 
in the UK if any British Gov- 
ernment were wise enough to 
open tbe doors. The net effect 
in West Germany will be to 
increase the growth rate and 
lower the unemployment rate 
compatible with low and stable 

InflaHnn 

Such effects should.be bene- 
ficial to other Community 
countries. To suggest that the 
prospective increases in nomi- 
nal German interest rate 
changes justify an EMS 
realignment concedes far too 
much to short-term thinking. 
Moreover, to the extent that 
the German outlook has 
become more inflationary, a 
firm rate against the D-Mark 
becomes mine rather than less 
important fear other countries. 

The French Finance Minis- 
ter, Mr Pierre Bdrdgovoy. has 
insisted that there should be 
no franc depreciation a gainst. 
the D-Mark. Shearson Leh- 
mann has produced a compro- 
mise realignment grid in which 
there is no change in the franc 
parity, but France is neverthe- 
less fenced to concede a 2 Vi per 
cent upward realignment to 
Germany and the Netherlands 
and small downward changes 
for the other members. The 
resulting changes are so small 
as not to require changes in 
existing market rates; and they 
do not affect the picture of 
average changes izL'the franc/ 
D-Mark parity of less tha&-2^ 
per cent per annum since 1983. 
The question arises why such 
minuscule changes are worth 
making at alL 

A monetary union requires 
the replacement of exchange 
rate changes by movements of' 
capital and labour, or changes 
in their relative prices. When 
the new forces in Germany are 
tending to produce just this 
extra mobility it would be pier- 
verse to throw a spanner into 
the monetary union process by 
a non-essential realignment 


BOOK REVIEW 


exan 


*1 SHOULD have spent more 
time with that boy. His prob- 
lem is be likes those oak-pan- 
elled rooms' too much." Lyndwi 
Johnson said of his old protege 
and then fellow Democrat. 
John Connally, when he joined 

the Nixon administration as 

Treasury Secretary to Decem- 
ber 1970. A decade later when 
Connally’s own ambitions to 
become President had col- 
lapsed in expensive failure - 
an outlay of over 611 m for just 
one convention delegate - he 
remarked: “I reminded every- 
body cf Lyndon.” 

The saga of John Connally is 
not only a dramatic story In 
itself, as James ReStan Jr viv- 
idly records, but it also high- 
lights the links between money 
and politics which are the 
lungs, if not the heart, of 
American politics. . 

. John Connally may, as he - 
himself recognised, have suf- 
fered in the end from being 
seen as Lyndon’s boy, but the 
two men were very different. 
Johnson, far all- his ruthless- 
ness and ambition, retained a 
concern for the poor and less 
well-off. But Connally lacked 
compassio n. He was always the 
voice of the well-off - the 
favourite of corporate America, . 
and the redpient af its contri- 
butions during his 1979-80 pres- 
idential hid. 

Much more than Johnson, 
Connally was, and id, the ulti- 
mate Texan - the expression 
of that state's optimism, -its 
restlessness, its willingness to 
gamble and cut comers, its 
vanity and even vulgarity. 
That has produced an unrival- 
led tradition of powerful politi- 
cians, from Speaker Sam Ray- 
burn, via Johnson and : 
Connally, John Tower, currant 
Senators Lloyd Bentsen and 
Phil Gramm, former House 
Speaker Jim Wright, three cur- , 
rent Bouse committee chair- 1 
men, to even that atypical, 
adopted Texan, George Bush. . 

But the state’s free-wheeling 
approach has led to recurrent 
scandals. Thia year alone, John 
Tower's nomination as Defence 
Secretary was defeated, to part; 
as a result of his dose (though 
entirely legal) links with 
defence contractors, while Jfan 
Wright was fenced to resign aa 
Speaker of the House of Repre- 
sentatives following his inter- 
vention with regulators over 
financially troubled. savings. 
and loan institutions. 

Connally sailed dose to the 
wind several - times in his 
career, notably when he was 
accused of receiving 610,000 
from .the milk industry follow- 
ing his intervention in a cru- 
cial price decision when Trea- 
sury Secretary- After a 
celebrated- trial, which featured 
evangelist Billy Graham as a 
character witness, Connally 
was acquitted to 1975. 

But the reputation of being a 
wheeler-dealer stuck. As Bos- 
ton notes, in the late 1970s 
after his acquittal Connally 
could have motored along 
before afinal push for the pres- 
idency, but “his gambferis love 
for tiie stiff bigger deal, took 


THE- LONE ST^R. 
The life of John Connally 
James Rcsixm jr 

Harper and Raw 'jRZJ.'T 


him back out on to the preci- 
pice. The presidency- was? a 
major goal of his life; but not 
the only goal*” He wanted 
money as wall as power. . Be 
went into business with Arab 
oil interests and this identifica- 
tion undermined his campaign. 

Switching party did not help. 
Conservative Republicans 
viewed tom aaann nptfn ct p tad 
fixer, willing to- support gov- 
ernment intervention tor busk 
ness, as over the Lockbsed res- 
cue to 1971. Outride Toms be 
had little popular appeeL 
Yet Connally was to many 
ways well qualfled to be Presi- 
dent - and twice vuy nearly 
became Vico President -during 
the 19708. H6 had a fotnddaMe 
political record - as aide to 
Lyndon Johnson; asjttvy Sec- 
retary during the Kennedy 
administration; as an ener- 
getic, If conservative. Governor 
erf Texas; and aa a memorable, 
if controversial, Tre asu ry-See- 
retaxy. 

- Reston records the dramas of 
1971-72 when Coxmatty *r aided 
by his then undersecretary 
Paul Voicker - played 4 cen- 
tral xtde to tin end erf the Bret-, 
ton Woods ffxadexchange rate 
system and the devaluation of 
thedtiQar. Mauy.-cf course, see 
these dsriataiB as-tbe root of 
subsequentprobtema, but hfe 
actions then tamed mm into a 
potential President, especially 
u the eyes ■■■'of 1 that shrewd 
obaervor. Rtdurd Ffemn. - 
Connally bad energy, intel- 
lect, vision aqd ' ri ha w n ' — • alt 
attributes of leadership- He 
Was also a heroic figure, gain- 
tog stature both frmn his naval 
service in toe Pafclffc' War a M. 
from November 22 1963. In Dal- 
las that day, travelling to the 
same car' aa President Ken- 
nedy, he also was dad and was 
tacky to survive. (Boston puts 
forward A plausible, though 
naturally improvable, case tint 
assassin Lee Harvey Oswald's 
real grievance was . against 
Connally, who was Msmfin 
target) *■’’ 

Far affCotmaDy’s Saws, it is 
a tragic story; ending in Janu- 
ary 1968 in a sale in Houstdncf 
Jusjtereonalposseesfam&altera 
final, speculative property 
binge led to bankruptcy. 

There ia an irresistible com- 
parison between Connally in 
his earlier' years and James 
Baker, the current S e cre tar y erf 
State. They have in common 
the roles of Texas corporate 
lawyers, decisive Treasury Sec- 
retaries, friends of Presidents 
and political deahnakers. Yet, 
while ft sfcwr has -'none of*- the 
doubtfol associations of Con- 
naHy, he haa : sfaxiilariy yetrto 
develop a popular, national 
appeal that will allow him to 
succeed his friend e n d mentor 
George Bush in the White 
House. • 1 , . 


Peter Riddel! 


r 1 ' t- -■.■‘j ■ ■■ 


FROM 


THE JEWELLERS, 

a Commodity more 

PRECIOUS THAN 

gole>; diamonds or 

PLATINUM. 


Time. 


Does it ever seem to you that the pursuit ;6f Wealth 1 
allows you, by its very nature, too little time to enjoy it? 

Note, then, that Cartier have decided to ifes tor& a- r 
little of the proper, balance of civilisation^ on the^ 
Thursdays between now and Christina^ by r gmainiwg ^ 
open until 8p.m. ■ . .... : .. . 

Open, somewould say, for business. 

Open, we prefer to think, for pleasure. Fbra relaxing 
gjass or two of champagne. for. an unhurried straff./ 
around our distinctive jewellery, watches^ pero/and': 


accessories. 




Just this once in your working day, you can ^Qcgr 
absolute freedom fium pressure. ■ - 

Temp tation, of course, is another matt» entirely M , ^ 


■&: 


CcuiierXid 


• - * * 
•• ’ ». i. ... 

- v> : — . 

V 

' Cl ’ - 

:-.v* 

-■ :£V 


175fl7& NEW BOND STREET, LONDON W1. % 

Late shopping with champagne on December 71b, 14&| and21« 
between 6 pjftu and 8 pjii. . 




: i. 


M- 




.A,' 

/ 


til 


'•Ss 


FlNANeiAL TIMES THURSDAY DECEMBER 7 1989 


•*$ 

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f^5 

*«38 

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;***$ 


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THAN 

OS0 

rM 




Will Dawkins and Hugo Dixon report on France’s phone system 

l Odd that AiBZfcAaBB'* . . ^ « 0 hanlifnp wiH fplwwii 

g~ The apron strings §ssf 

l&fid a had rsnutatifyn mrtiv «kti hmnon 


I t may seem odd that Jean-Fran- 
V$s Bear, head .of the French 

tftfephfiBfe nsatf aumduHn^; fa a 

contented man. : 

France TQ&om audits government 
masters haveeamed abad reputation 
among their Mberal E u ropean Com- 
munity ndghbours’ttfr deiaying'EC 
moves towards tofovpwm ttr foarirm « 
deregulation and frn-hrfn ^'i4w^ inter - 
ested In tfafamw-ng their p Mn tele- 
phone -monopoly than in-looking wftyr 
the people who na the service. 

Yet accanting to 'Mr Berry, who rep- 
resents 600 big, and very critical, cor- 
porate t elecomzmmications eustom- 
gra> . the , reaMty ;.is. very different. 
French teteccm m mi icatii onanaaaare 
tappy, he says, because their phone 
charges among the lowest .in the 
world, below even, pro-cam petition 
coun trie s Hke Britain and West Ger- 
. many. They jhave the wcaSffa largest 
data switching network; the most di^ 
Sal transmission capacity; and the 
leading videotex! service, SfinitaL 
- Add -to that France Tfigcora’s fast 
response to the demands of Mr Ber- 
ras' W S BriMfl o n tor -newsservices 
s «di as itemised phone bate, and. the 
pocmre is. of a European .loader In 
public tateco wwinwiwie bom, not the 
laggard its- critics have hi wferf 
Paris fahoweror, now embarking 
on.; its. own telecommunications 
reform,- pertly. driven by EX? deregula- 
tion and partly by France Tfl&om’s 
desperate temneaa to be fined from 
heavy: potttical control. 

■ The- French government recognises 
that France Telecom heeds to be 
given ftshead if it is to compete effec- 
tively on. international markets. None 
the least it is not about to abandon its 
commitment to a. strong public ser- 
vice ethic.- The policy of providing 
modem te?i»«nmw m nlraifrif)3 farffttfog 
on a uniform basis across the nation 
is responsible fin- the success of ser- 
vkss-euch as MfniieV officials argue. 

Reform plans to be submitted to the 
French Parliament next -spring, will 
give operating autonomy to nance 
Tfldcom and the Post Office, cur- 
rently divisions of the Post and TSte- 
pammiBdcattana Ministry.. The tele-' 
cpmmunicatiopg regulatory authority 

t he T p l«V-f >Tr>TnTm1/-gHnnc MhiistrV. 

There wfQ. be. new rules specifying 
which areas of the ran*™* wffl.be 
open to competition an&^wbich wffibe 
prance TSSconx monopolies. 

. The current mn tu tf it i in, policy was 
started by a recent independent 
report commissioned by the Govem- 
raeat fro m tM g .H nhert Patent, forma; . 

head of the TWtinnal . Tibnningn wi i w 

The repeat warned that France Tele- 
com needed to change In. order , to 
compete once EC plans to . liberalise 
the wovimon-of tmeixaimiuhications 
services from 1993 are fa^iwnwitiri 
Mr Paul Qpfle, fhe French Telecom- 
munications: Monster, 'first has to pex- 
suade the twin oreanisations' 435,000 
sc^tical an 4 w^woganlsed employ- 
ees that they wffl not lose the job 
protection they now get from being 
cflvQ servant^. Hfa negotiations, wbteh 
started In September, are going well. 


are being untied 


.. hot It wffl be tricky to fazing them to a 
successful coachigon. 

Moderate tmtops iflm the white col- 
lar FO arid the CFBT accept that 
change- must come, but the highly 
tnfTiwmtiai Connnunlst-Ied CGT — the 
union that recently organised the 
worst strike ever experienced at Peu- 
■ geot - would like to seism the plan. 

They see It as a covert attempt to 
.. revive a privatisation plan tentativoly 
floated by Mr Gdrard Longnet, Mr 
Qofl£^ predecease. Mr QuOfis* advis- 
ers deny tMs is the cm - 

So far, fhe Government has deverly 
used EG pressure for liberalisation to 
lean . on the onions to accept reform. 
. Even mOTe cleverly, it has been able 
to use union resistance to support its 
own arguments in the Community for 

Trmm ranHnna W iw al i lli itinn than pfp, 

posed by the . flnrnmiwinn wtm! sup- 
ported by Britain and West Germany. 

The pre ssure tor change Is partly 
European, but the Government proba- 
bly would not be moving so fast woe 
it not for the demands at France T&e- 
com, its suppliers and users. 

, France Tdidcom’s managers 
strongly r e se nt s Finance Minis- 
try^ right to help itself to their reve- 
nues to fimd tire state budget They 
can never predict how much the 
. annual charge is going to be (last year 
it was FPrlS-lbn out of a FFr87-6m 
turnove r) - a real handicap at a time 
when the organisation Is investing 
heavily in new services like mobile 
telephones and integrated services 
digital net w or ks . 

“Above all, we need fiscal stability. 
Under present conditions, our 
finimrBi are decided tor rea- 

sons, which means we cannot make 
contracts on a commercial basis,” 
says Mr Marcel Boulet, France Toe- 
corn’s director general. T am not ask- 
ing for total freedom,'' he adds. T 
accept that the.Government should be 
allowed to set three basic parameters: 
.our quality of service, our maxi mum 
level of borrowing and our prices - 
but that is all." . 

France .Tdldcotra’s suppliers agree 
that change is needed. “At present, 
we have a master-slave relationship," 
says Mr Jean-Clande Lavenir, head of 
SI3T, the <yiw»npininiitwirtnmi equip- 
ment makers’ association. He says 
ftat conflicts over contracts cannot 
usually be resolved in court as they 
could be if France TOdcom were a 
state-owned company. The Govern- 
ment instead decides, as “judge and 
jury in its own case.” 

Nevertheless, French telecoms man- 
ufacturers are fludfwg that their cosy 
wodd is bring shaken up as a result 


Ttaandg ov et am ent l ev ie s 


bnestnent 


FFrMBon 
20 


Introduction of 
WV11/87 



1082 83 84 85 88 87 


Introduction of FFr 
VAT 1/11/87, bfflton 
40 


M Inducting VAT I 20 

* Excluding VAT I 


82 83 84 85 88 87 


(al charges) 


DOMESTIC 

US (New York) 

FFr 

145 

BUSINESS*. 

US (NewYbrk) 

FFr 

1,584 

Ranee 

156 

France 

1.681 

UK 

219 

UK 

2£40 

W. Germany 

225 

W. Germany 

24?36 

Japan 

356 

Japan 

3,544 

Source: Lodca 


• Excluding VAT; US includes tax 


of new entrepreneurial spirit at 
France Tridcom. Just as the state is in 
the process of untying the apron 
strings which bind France Tflticom to 
it, ftance TSticom is developing a 
more arms' length relationship with 
its suppliers. 

“hi the 1970s, there was a policy to 
build a st rong telecoms industry to 
serve the DGT [as France Telecom 
was then called] and become a player 
an the world market,” ex plains Mr 
Jean Grenier, who until recently was 
in charge of group's purchasing 

policy. “Procure m ent policy was very 
nationalistic.” 

The costs of developing new tech- 
nology, however, are driving France 
Tfldco m to buy eq uipment from for- 

tQ finawnw ftp of 

two competing systems for the domes- 
tic French market alone. Now, France 
Tfiticom nOW has to go ahma«l to find 
competitors to Alcatel, the dominant 
local nMTmfarfnrlng gro u p. 

Competition from abroad is also 
compelling France Tridcom to open 
np its purchasing policy. Companies 
jfkft British Telecom American 
Telephone & Telegraph are not free to 
compete an France TOdcom's home 
prrf i but they could la rge multi - 
national clients a better service and 
so persuade to incuts their trie* 


•W-Vf- 1 ; T 3-!!_ 

5X£.^.’iw*i«5V— • l.- 


Letters 


cn m n u rn icattmis hubs elsewhere. 

France Tdldcom cannot therefore 
afford to £aQ behind other operators 
in the race to TnwterntsA networks . So 
If domestic suppliers do not have the 
relevant piece of equipment, it is 
forced to boy from foreign com panies. 

Nevertheless, the industrial policy 
of tlw p as t decade meant that 
Alcatel is now In a strong position to 
fend off competition from abroad 
except in specialist new areas such as 
mobile communications, intelligent 
networks, private circuits and fibre- 
optics. More vulnerable are gmaiicr 
French manufacturers, such as SAT, 
which many obser vers feel will not be 
able to survive international competi- 
tion may be driven into tie-ups 
with larger foreign groups. 

In addition to the law changing 
France Tdldcom’s structure, there will 
be new rules spelling out for the first 
ti™ those areas where France Tdlfi- 
h>w Hgg to competition. Under 
p resent le gisla ti o n , which dates 
back to 1837 when Louis Philippe was 
attempting to contro l the e m b r y on ic 
telegraph se r vi ce, the Telecommuni- 
cations Minister has carte blanche to 

grant teUmoinimmiratinnH Kwww y to 

whomever he wishes. 

A monopoly wffl be maintained on 
the baric net wok and phone sendee. 
Value services, ;mrh as htmu* 


:r>' 
?,\r ‘ 


fagnMoR fpiwwHwmntoat inni! ter- 
minal equipment, wffl remain open to 
competition, although there will still 
he tnngh Hmnsmg conditions. 

It is uncertain, though, what 
exactly wffl lumpen to mobile, satel- 
lite and ftete r m n mi mteiHwna — 

three of the fastest growing parts of 
the market 

The policy towards mobile commu- 
nications is probably the most impor- 
tant because this is the area where 
France’s dxrigiste policy has failed 
most notably. France Tdldcom execu- 
tives did not appreciate the impor- 
tance of mobile communications 
because they were concentrating on 
putting in llbreoptic cables and Minl- 
tel terminals. 

The upshot is that density of mobile 
phones in France is one fifth of the 
UK’s and one twentieth of Scandina- - 
via's. The position “is honourable, but 
not consistent with Fiance’s general 
position in telecommunications,” says 
Mr Jean-Jacques D&mlamian, bead of 
France TflScom’s in^hne. operations. 

Although the policy on.mobile com- 
munications remains fuzzy, ft is basic 
data communications that have 
proved the bone of contention 
between Brussels and Paris. 

The French government initially 
wished to maintain a complete 
monopoly on baric data switching In 
order to protect France Tdldcom's 
public service mission. “Ef the public 
service has to connect everybody even 
if It costs money and the competitors 
cream-skim all that is profitable, that 
is the end of the public service,” 
argues Mr Bruno Lasserre, bead of 
the telecommunications regulatory 
authority. 

Now, however; France has softened 
its position and is propos ing that pri- 
vate companies should be allowed to 
compete but only provided they 
adhere to strict conditions which wffl 
ensure that they do not undercut the 
public data service. As EC President, 
France has launrhiwi a diplomatic ini- 
tiative to persuade other member 
states to back this sew line In prefer- 
ence to the Commission’s more liberal 
approach at a meeting of telecoms 
ministers which place today. 

Nevertheless, despite the interna- 
tional controversy over basic data, the 
issue hardly registers with French 
users. “We do not have any complaint 
about the availability and juices of 
public data services,” says Mr Berry. 

The overall package of reforms now 
bring planned in France may not go 
as far as economic liberals in Britain 
or West Germany, which have already 
wniwritwi on more radical ro fti rm^ 
would like. But, unlike the other two 
nations, France is roft wmiwg its trie- 
communications structure from a 
position of comparative strength. 

me aim is not so much put pres- 
sure on an inefficient public monop- 
oly which has forgotten how to look 
alter its customers as to give an effi- 
cient operator the freedom to stay 
ahead of the game while retaining a 
strong public service ethic. When 
domestic users are so contented, it is 
difficult for outsiders to carp. 


Lombard 

The ‘logic’ of 
bosses’ pay 

By Michael Skapinker 


IS THE PAY of Britain's top 
executives based on rational 
principles, in which rewards 
are linked clearly and fairly to 
performance, or is the guiding 
motivation nothing more than 
the desire to be rich? 

Evidence for the latter prop- 
osition Is to be found in the 
Burton Group’s recent 
announcement of the new sal- 
ary to be paid to its chairman. 
Sir Ralph Halpern. 

Sir Ralph is not just another 
well-remunerated executive. 
He has presented himself as 

tiii» riiBHipinn of the highest- 
paid, arguing forcefully over 
several years that those who 
achieve success should be 
rewarded for it 

Even so, ft might seem per- 
verse to single him out for crit- 
icism. given that his pay actu- 
ally fell by £97,000 to £899,000. 
On the basis of Burton’s pay 
formula, however, which is 
based on earnings per share 
growth, ft should have fallen 
even further. It did not because 
of a one-off discretionary pay- 
ment awarded by the non-exec- 
utive directors. 

Whatever the Justification, It 
would have been better if the 
Burton formula had been 
strictly applied. The targets 
Burton set for Sir Ralph were 
testing ones. He profited hand- 
somely when he achieved 
them. He should have accepted 
whatever pay cut his perfor- 
mance merited. It is payments 
of this sort which encourage 
the view that Britain's bosses 
make up the rules as they go 
along. 

Sir Ralph is a long way from 
being the worst offender. At 
least bis group's pre-tax profits 
rose 5.7 per rent, at a difficult 
time for retailers. Moreover, 
this is the second year in a row 
that Sir Ralph's salary has 

fallen 

There have been instances of 
chief executives accepting pay 
rises when their companies’ 
profits have fallen. And there 
have toi 1 many of exec- 

utives' receiving percentage 
increases far In of their 

companies' rise in profits. 

Britain's well-paid say that 
their pay increases have noth- 
ing to do with them, ft is the 
non-executive directors who 
decide. But no-one can be 
forced to accept a pay increase. 
A chief executive who turned 


one down would demonstrate a 
level of leadership that has 
been lacking in British board- 
rooms. 

The most unfortunate aspect 
of the way UK chief executives 
have dealt with their pay is 
that they have spoiled a per- 
fectly respectable case. 

There was something per- 
verse about a country which 
took the newly-rich to its heart 
only if they made their money 
by playing football or singing 
pop songs, rather than by man- 
ufacturing and selling goods. 
British executives teen poorly 
paid compared to their coun- 
terparts abroad. 

Most important, at a time 
when Britain desperately 
needed to become more com- 
petitive, there was every rea- 
son to tie top management’s 
pay to results. 

Having established the rules 
by which their remuneration 
was to be calculated, execu- 
tives should have been pre- 
pared to play by them. Their 
obligation to do so was all the 
greater because there was no 
effective check on their ability 
to pay themselves whatever 
they wanted. Non-executivc 
directors have not in general 
shown a willingness to stand 
up to well-paid chtof execu- 
tives. Although institutional 
shareholders have been able to 
impose some restraints on the 
size of share options offered, 
individual shareholders who 
have complained about exces- 
sive pay increases have usually 
been ignored. 

Having obtained such power 
for themselves, too many exec- 
utives have abused 1L When 
their companies' performance 
did not merit an increase, they 
shifted the argument and said 
they should bo paid as much as 
their colleagues in other indus- 
tries. When they were paid as 
much as their colleagues in 
other industries, they com- 
plained that they were not paid 
as much as their counterparts 
abroad. 

They have appeared oblivi- 
ous to the effect their increases 
might have on the pay claims 
of employees, tm lnflntinn and 
on British competitiveness. 
Some have demonstrated an 
-rm all right. Jack” attitude 
which would have been the 
envy of a 1970s trade union 
leader. 



The number you are 
calling is 1992 


tiveness of the Landau market 
internationally, benefiting the 
practitioners in the market 
rather than the companies 
whose shares are traded 

thwwhi- _ _ _ 

1 We continue to feri.lt essen- 
tial that our shareholders have 
a document at title tor their, 
holding, and that whatever 
process is evolved enrides com- 
panies to update their Share 
registers weekly. - - - - '* 

, There has been a tendency 
far recent years' to increase the 
financial bur dens- of conmantes . 
whose shares are quoted; one 
can foresee a further step m 
this direction. We very much 
hope that in the flnri proposals 
toe two des id erata dek out here 
are catered 1 for witborittha rig-- 
nffle ant additional’ costa. - 
Cofin Campbell, 

James Finlay, 

PO Box 58, Finlag Pause, 

West NOe- Street, 

Glasgow, Scotland 


with Taurus . ir , . iru 

Prom SfrOoBn CcanpbeU. C&lilH£ IS 17. 

•' Sir, Your editorial (“High . . • • 

cost of share deals,” December . n 

5) Is too facile for tire smaller G..i ^ eruMck, 

public companies such a* our- ^^^^o^ xmmunica ' 

“aTWo understand it, the Sir. Pam otgj &icjte a com. 

teUgaei toreMn design^ 

technologists with technologi- 

w Sneeds in mfad; they are 
practitioners -in the market rf 

rather than the wmipaiiies i unftfendfr to tire normal buri 

jrtoje .hare. «r« tnuUd ^ 

^ well within countries, and they 

We continue to feri it e ases- m a disaster when two coun- 
tial that our *arrireito»fcavB tries are connected together, 
a document al title tor their. 

r There are no standard, tog-Jn or 

holding, and that wha tever progress nro- 

prtx*s8 is evolved ra^es rom- cedore^^ those that 
^^touptote their Share ^ [ajgdy incomprehensible 
registers weekly- , ■ to the average user. Telecom- 

^There has been r ^ tmjfency nmnlcatkms , prices are gener- 

iu recent years to foexease tire any expensive, and the tariffii 
financi a l bogdans-of co m p an i es . groUffioffl to understand. Call 
whoseshareg y - failures aver age one in four, 

can foresee a further «q> to jjgga believe that competi- 
this direction. We ray modi tion would thamtu 

gopethritoffiefoial ' potato- effective services at 
the two OBsMeraJa set our here affordable prices. They believe 

fe^ ecnatitrlcs’ -t^feo^xxraxxlcsb- 
nMc a nt additional costa. - . tion networks wimpw te 

Cofin Campbell, . r.;. Sr5«h oflrertSfoilS^ 

^2?*!? for^ example, Trenspac offers 

PO Bax 58, PMag Pause, services in the UK — andinter- 

West NOe. Street, ... . , national- operators should be 


intended, to extend them to 
inappropriate places, and to 
introduce ambiguity to leave 
scope for unfavourable inter- 
pretation, thus undermining 
the thrust of the ori ginal inten- 
tion. 

This ap plies not only in tire 
rules bating to d ata networks 
bat to ftow which wifi, govern 
private circuits. User interests 
to countries oppose these 
positions, but have been 


There -is an almost equal 
ditical balance in the EC 


The UK, West Germany, tire 
Netherlands, Denmark and 
Ireland are pro-liberalisation. 
So, indeed, is the European 
finrnmittrinn — a nd Sir Leon 
•p rittan. the senior UK Coxn- 
uuBsUmer, has been unequivo- 
cal In his determination to 
move in tire direction of com- 
petition. H e nc e a deadlock has 
developed — and this has 
.encouraged the French c hair - 
wiim to propose a compromise 
solution which would not, how- 
ever, result In the required 
t m p m p B iTK mt H users seek. 

. The conditions he proposes 


per mi tted. The European Com- ‘ would constrain potential ser- 


Benefits in 


From Mr Patrick Banoise. 

Sir, 1 was sorry, that. Mr 
David Meilor, the ndw Broad- 
casting Minister,, has starte d 
by announcing such a strong 
personal commitment' to sell 
TTV' (Independent television) 

franchises to the highest bid- 
der (November 29). 

He rightly says that this 
would be the best way of find- 
ing out what a franchise is 
worth - but that Is hardly the 
main concern. 

. instead, the UK Govern- 
ment's stated a im ^ “ to- plage 
viewers at tire centre of broad- 
casting poKcy^ the very oppo- 
site of what this proposal will 
achieve. "■ *■ 

A policy which maximises 
the tax yield from 1T-V s tiver- 
tidng is bound -to reduce IFY- 
programme btrigets, which fa 
bound to be bad tor viewers 
and advertisers T5» only bene- 
fidaries wffl be the Treasury 
and perhaps the BBC. 

Patrick Barwise, 

London Easiness School, 

Sussex Place, 

B agents’ Pork, NW1 


mission Shares tide view. 

- When its recommendations 
for telecom liberalisation ware 
endorsed by . the European 
Comxmtofty’s Council of Minis- 
ters an June 30 1988 it seemed 
, that all was phdn sailing. How- 
ever, tire forces of reaction are 
strong; and in tire drafting of 
the directives to rive effect to 
the Commission proposals the 
.prospects bf telecommunica- 
tions competition are receding, 

daily. 

The EC Council of Minsters 
met on November 7 and did 
notiiing to correct tire draffs 
defection from the previously 
agreed position. They arranged 
to meet again an.December 7, 
which may be a last chance to 
get back an the rads. 

The development which has 
changed opinion between June 
1988 and now is the change of 
government In France. This 
has produced a ■ cooling of 
enthusiasm for tefacommunica- 
tkms liberalisation in that 
c ountr y, and provided strong 
iPBtfcmghip in the EC for those 
who were never keen in the 
first place - particularly Bel- 
gium, Greece, Spain and Italy. 

These countries have persis- 
tently sought to writs tire rules 
less liberally than was 


vice providers, and would not 
«m«hfe the bengfita of competi- 
tive supply to be realised. His 
proposed delay - to 1998 - of 
some beneficial measures is 
excessive and unnecessary. 
Tbe compromise suggested is a 
short move from the unaccept- 
ably Illiberal proposals put pre- 
viously by the same clique, ft 
stffl falls far short of what tele- 

co mm m d catiocg users (and the 
Eu ropean Commission) expec- 
ted. 

The high profile given to 
telecommunication problems 
to tire run-up to the single mar- 
ket of 1982 is because it had 
been identified, earl y on, as a 
vital «tem«nt of the infrastruc- 
ture to support the Common 
Market The Commission has 
done wen, in difficult circum- 
s tances. up to now. ft will be a 
gr yfl t pfty if the Commission's 
foresight and hard work are to 
be brought to nought - as 
merlin likely — by an unfa- 
vourable outcome to the meet- 
ing of Minis ters on December 
7. 

G. McKfmrfririr, 

Director, huemattonoi 
Tebconommieattons 
Users’ Group, 

18 Westminster Palace Cardens, 
Artillery Bow, SW1 


The problem 
is poverty 

Prom Mr Benry Bardman. 

Sir, Your reviewer says that 
reforms recommended by 
Christian Aid to deal with 
world food problems, “if imple- 
mented, would presumably 
ameliorate the situ at i on ," but 
she rightly dismisses them as 
impracticable (November 23). 

Ought we not to go further, 
and recognise that the problem 
is world poverty rather than 
tire more emotive “ w orld food 
needs”? That would help to 
secure understanding that 
progress towards lessening it 
can best be found not through 
commodity support re l ated to 
fanners, but by financial aid 
from rich countries to poor. 
Henry Hardman, 

9 Sussex Square, 

Brighton, East Sussex 

All in a day 

From Ca pta in JJL Passmore. 

Sr, David Churchill, in his 
article “Away-Day to New 
York,” seems to have got con- 
fused with zeal time and real 
elapsed body time - whatever 
that is - when he says that 
the hot-shot executive will 
have been up for nearly 20 
hours at least if he goes to New 
York for the day. 

Assuming he rises at 0630, is 
in his office at 0800, has his 
meeting in New York and 
arrives back at Heathrow at 
2225, he will be at home before 
midnight: a 17V4 hour (fay; a 
normal length of day for many 
businessmen nM women. 

Jim Passmore, 

General ManagerfFtigkt Crew, 
British Airways, 

PO Box 10, 

Heathrow Airport (London) 





For those who've never given a 
second-hand car a second thought 


Fax of 
matter 


From Mr Edward 
EeHettBouman MSP. 

Sir, The proliferation of fac- 
simile machines to confu- 
sion and expense because peo- 
ple put their fax numbers cm 
letterheads. Very soon, elec- 
tronic man numbers will also 
become commonplace. 

May 1, through your col- 
umns, propose that non- tele- 
phone numbers are put in a 
box on letterheads? 

Edward KeUett-Bowman, 
Ndish&Bam, Newnham, 
Basingstoke, Hampshire 


A second-hand car doesn't have to look 
or behave tike a second-hand car. Not if it’s a 
Mercedes-Benz with the official 'Quality Used 
Car* label. 

Start with the undated appearance. 
Mercedes-Benz don't alter their designs every 
time there's a motor show. And the quality of 
the paintwork and trim Is such that normal 
wear and tear is scarcely perceptible. Interior 
materials retain their appearance and feel, with 
no maintenance except occasional cleaning. 

Mercedes-Benz expect their cars to perform 
as well after 90,000 miles as they do just after 
they are run-in. So most people would be hard 
put to tell the difference between a second-hand A 


manufacture. Every process is checked and 
re-checked until the procedure is perfect. Every 
component is tested to destruction and 
Mercedes-Benz actually provide the testing 
equipment for some of their external suppliers. 
Materials are subjected to the equivalent of years 
of wear testing in laboratory simulations that 
operate 24 hours a day, 7 days a week. 

Whilst the first owner of a Mercedes-Benz 
enjoys the obvious benefits of driving a brand 
new car. owners two and three can enjoy all 
the privileges of Mercedes-Benz motoring at a 
lower price. 

A well-maintained, dealer serviced car will 
k still look stunning and behave impeccably. The 


Mercedes-Benz and its new equivalent. The /jSSr 5\ high levels of safety and driving pleasure 
only ‘giveaway’ would be a letter on the number remain undiminished. And if a second-hand 

plate. The reason for all this ENGINEERED LIKE NO OTHER CAR Mercedes-Benz costs a little 
is as simple as it is complex. IN THE WORLD. more than an ordinary new 

The production of any new Mercedes-Benz car. it’s still a small price to pay for a vehicle that 

model is planned to avoid problems during treats the passing years with almost total disdain. 


market 

v tVl 5k* 

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fapread 

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ct 

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: Ljun. 

C l: 

i 

i ll td 






SHEERFRAME 


Window & Door Systems 

M for the World Market 

9 LJL Plastics Limited 

Tel: 0773 852311 


FINANCIAL TIMES 


Thursday December 7 1989 


PHILIPPINES REBELS HOLD OUT 


Mrs Aquino declares emergency 


By Roger Matthews in Manila 


THE EMBATTLED govern- 
ment of President Corazon 
Aquino yesterday declared a 
national stale of emergency to 
combat "the serious social and 
economic damage" caused to 
the Philippines by the continu- 
ing military rebellion. 

Rebel troops permitted sev- 
eral hundred foreign tourists 
and businessmen to be evacu- 
ated from the hotels in which 
they had been trapped by four 
days of fighting. But the rebels, 
estimated at about 400 men 
from the crack Scoot Rangers 
battalion, still have control of 
Makati, the main business and 
financial district of Manila. 
Other rebel forces are holding 
the air force base at Mactan 
just outside Cebu, the coun- 
try's second largest city. 

Under the state of emer- 
gency. Mrs Aquino has power 
to take over or direct the 
operations of any company, the 
activities of which are very 
broadly defined as “concerning 
the public interest" Several of 
the most prominent companies 
in Manila are either 
with the late President Ferdi- 
nand Marcos or with oppo- 
nents of Mrs Aquino. 

She has also invoked exist- 
ing powers to prevent the 
media from reporting state- 
ments by the rebels, or giving 
any information about govern- 
ment troop deployment Two 
radio stations, one in Manila, 
the other in Cebu, have been 
taken off the air under regula- 
tions which allow the govern- 
ment to close down any organi- 
sation deemed to be proposing 
or inrftfng treason. The gov- 
ernment denied the new regu- 



TOURIST 



A bus fa hew tourists businessmen to safety in Manila 

after they were allowed through by rebels yesterday 


lation amounted to censorship. 

Several hours after the state 
of emergency was declared 
local television stations carried 
an interview with one of the 
rebel officers, who again 
demanded the resignation of 
Mrs Aquino. 

Presidential aides empha- 
sised yesterday that the mea- 
sures taken stopped well short 
of martial law, which is associ- 
ated in all Filipino minds with 


President Marcos. In an effort 
to invoke the surge of popular 
emotion which toppled Mr 
Marcos nearly four years ago, 
Mrs Aquino has called for a 
“people’s power” demonstra- 
tion tomorrow “to show that 
there are still Filipinos who 
love their country.” 

The powers taken by Mrs 
Aquino and the bid to rally hear 
waning public su pp ort are an 
acknowledgment that if surren- 


der talks with the rebels fail it 
may be almost impossible to 
dislodge them militarily. A 
member of the National Secu- 
rity Council said that a mili- 
tary solution was not an option 
because of the loss of life and 
heavy material damage which 
would result from any attempt 
to storm the 18 or so buildings 
they occupy. 

“We continue to expect that 
when they see no reinforce- 
ments are coming they will 
re tur n to barracks,” he said, 
emphasising that, because of 
military sensitivities, the word 
“surrender" could not be used. 
“The men we really want to 
identify are the political prosti- 
tutes who have been financing 
this operation,” be added. 

Mrs Aquino’s adviser also 
accepted that there was a 
“public clamour” for govern- 
ment changes and a more 
activist cabinet. He thought 
that these demands would soon 
be met by the president 

A senior American diplomat 
in Manila confirmed yesterday 
there was evidence that the 
rebellion had been carefully 
planned, with food and ammu- 
nition stockpiled in advance In 
Makati. 

Such beliefs have led some 
officials to speculate that there 
may be a further stage in the 
rebellion aimed at more wide- 
spread attempts to disrupt the 
economy. This could take the 
form of inciting popular resent- 
ment over prices, creating sop- 
ply shortages or sabotaging 
distribution networks. 

The government has already 
imposed price ceilings on rice ■ 
and other basic foodstuffs. 


Fed figures civic Forum to have veto on 
economic new Czech cabinet make-up 


slowdown 


By John Lloyd and Leslie Colltt In Prague 


By Lionel Barber 

in Washington 


MORE evidence of a slowdown ! 
in the US economy, particu- 
larly in manufacturing, 
appeared in the Federal 
Reserve’s Beige Book regional 
survey published yesterday. 

The survey said that the 
majority of districts reported 
weakness in manufacturing 
activity, though there were 
pockets of strength in con- 
struction, agriculture and sev- 
eral energy industries. Two 
districts reported an overall 
softening in local economy. 

The report said that prices, 
however, were reported to be 
flat or slightly higher. Several 
districts mentioned the con- 
tinuing escalation of medical 
insurance costs. 

The Beige Book is the sum- 
mary of economic activity pre- 
pared for use at the Fed's Open 
Market committee meeting. 
The next meeting is scheduled ; 
for December 18-19. 

Evidence of a slowdown In 
the US economy has been 
mounting recently. This week, 
reports showed that new fac- 
tory orders and sales of new 
homes dropped last month. 
Last week, the index of leading 
indicators fell 0.4 per cent, 
matching an unfavourable 
report from the National Asso- 
ciation of Pur chasin g Manage- 
ment 

Economists and financial 
martlets are now looking to see 
whether the Fed, through its 
money market operations will 
lower interest rates to revive 
the economy. 

The latest Beige Book report 
says that consumer spending 
has varied among districts, 
with retail sales mixed 
throughout the country. 

Weakness in the car industry 
and among suppliers was com- 
monly blamed for the slow- 
down being frit in areas such 
as Philadelphia, Boston and 
lastly Cleveland “where the 
pace of activity was strong for 
the first nine months of the 
year." 

On the brighter side, capital 
spending In Atlanta continued 
to rise in the chemical, metals, 
wood and pulp, and industrial 
equipment industries. While, 
in still-depressed Texas, firms 
in Dallas producing oilfield 
equipment and chemicals 
increased their sales. 

Trade deficit forecast, Page 6 


A NEW Czechoslovak 
government was being formed 
yesterday in negotiations 
between Mr Ladlslav Adamec, 
the Communist Prime Minis- 
ter, and the Civic Forum oppo- 
sition. 

Under pressure from a vast 
demonstration on Monday and 
a threatened strike, Mr Ada- 
mec is to propose today a new 
cabinet to thp praesidium of 
the National Front, the body 
which brings together the 
Communist party with its for- 
merly allied parties, the Social- 
ist and People's parties. Civic 
Forum submitted a series of 
proposals for the reshuffle. 

At the same time, Mr Jostf 
Bartoncik, chairman of the 
People’s Party, has proposed 
that the new government be 
split SO/SO between members of 
all parties including the Com- 
munist party and non party 
members. 

Mr Adamec last night pro- 
tested that the confecting pres- 
sures on him could prove too 
great. In a televised address, he 
threatened to resign if the gov- 
ernment he is expected to 
announce tomorrow is not 


accepted. 

Mr Vaclav Havel, the play- 
wright, who led the Civic 
Forum delegation at the meet- 
ing with Mr Adamec, said the 
Prime Minister had promised 
to propose government 
changes to Mr Gustav Husak, 
the President, today - but only 
after he had cleared the Hat 
with Civic Forum. 

The fact that Civic Forum is 
gn**fag an effective veto over 
the administration’s make-up 
marks a new success for the 
three- week-old group. 

Discussions within Civic 
FOrum on a replacement for Mr 
Husak, whose resignation it 
has demanded, centred yester- 
day on three names: Mr Ada- 
mec, Mr Havel, and Mr Alexan- 
der Dubcek, the Communist 
leader deposed after the 1968 
Soviet invasion. 

Mr Adamec's recently 
formed “government of 
experts" disappointed both 
Civic Forum, Public Against 
Violence (the Forum’s parallel 
organisation in Slovakia), 
many Communist party mem- 
bers a nd , appa rantly , yww i citi- 
zens. 


Only five non-Co mmunist 
ministers were appoin t ed out 
of 21, none in senior positions. 

In an earlier meeting with 
the Forum, Mr Karel Uxbanek, 
the Communist party leader, 
appeared to support a reshuf- 
fled rahinfrf when he — ac- 
cording to Mr Havel - that he 
supported Forum’s proposal 
that the Government “would 
consist of young; able people 
who are experts and are not 
discredited.” 

Mr Urbanek promised that 
the party-controlled Workers’ 
Militia had deposited their 
weapons in army stores and 
would act only as a force to 
deal with national emergen- 
cies. He added that the STB 
secret police had “lost its pur- 
pose", and that the Communist 
party “realised the deeply 
rooted mistrust of people 
against if. 

The power structures of the 
party and government contin- ■ 
ued to topple. Five hardline 
members of the Slovak 
National Council resigned, 
including Mr Villiam Salgovit, 
a signatory of the appeal to the 
Warsaw Fact to invade in 1968. 


Bush to approve renewal 
of voluntary steel quotas 


UK water sale 
oversubscribed 

Con tinned from Page 1 


By Nancy Dunne in Washington 


PRESIDENT George Bush this 
week will sign legislation 
authorising a 2 '/i -year renewal 
of a US “voluntary" quota pro- 
gramme which will reshuffle 
the shares erf the US imported 
steel market 

Under the programme - de- 
tails of which are expected to 
be announced today - the US 
will cut Japan's quota alloca- 
tion, while giving higher 
shares to Brazil, Mexico and 
other Third World producers. 

Mrs Carla Hills, the US 
Trade Representative, is also 
expected to announce several 
agreements by signatory coun- 
tries to phase out or ban subsi- 
dies of their steel industries. 
US officials expect these agree- 
ments to be folded into a per- 
manent agreement under the 
Uruguay Round of interna- 
tional trade tail?]* 

The steel legislation also 
contains a provision altering a 
surtax on petroleum products, 
which was found illegal under 
the General Agreement on Tar- 
iffs and Trade. 


The fee was higher on 
imported ml than on domestic 
oil. The amendment would 
equalise the two rates by 
imposing a 9.7 cents-per- 
barrel tax on all petroleum 
products. 

Although most pieces of the 
steel quota programme have 
been fixed for weeks, the 
Administration has been 
rmahip to reach a settlement 
with Brazil. 

The dispute was finally 
resolved last Friday with an 
agreement which reportedly 
gives Brazil the largest 
increase aTnnng 1 fhw five nmiw 
suppliers, a possible boost in 
shipments of as much as 55 per 
cent over the next two years. 

The new voluntary restraint 
agreements follow a five-year 
protection programme, insti- 
tuted by the Reagan Adminis- 
tration. 

It puts an 18.4 per cent lid on 
the US import market, but dis- 
tributes an additional 1 per 
cent to those countries which 
have agreed to end subsidies. 


WORLD WEATHER 


X v 

» 81 Du&nm* 

a 86 EdMwgh 

B 48 Faro 
» SB Roranee 
17 S3 FtwMun 
81 BB FimM 
0 55 Ohm 


B.MN4 

Cairn 

(MM Tan 


0*380 

Cosadnaon 

Corfu 


U QKBBM 

I V OlMRIMV 

> 41 Hww 
I 59 H. lung 

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\ 80 UnM 
I 95 mu 
l 78 Mann 
84 -tasty 

- JOKurg 
I 74 Lao 

si um 

- London 

98 LuAnaotai 
45 UMn*o«B 
81 Uadi Ml 

- MafGKS 
i 48 IMaga 


X T 
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c on 

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S 8 48 

So -1 80 

B E 79 

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Maueo Qljr 
Mmd 


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C 3 37 


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Mdno 

ProQuo 

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ftwdtafl af 
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fl so a San Ftaodaeo 
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C -6 O SMMn 
sn -w M s i t i e bo b 
C 4 28 Sydney 
R 2D 88 Taipei 
F IS SB Tangier 
C 3J 75 TU Mv 
8 21 70 Taarfla 

G 2 38 Tdqo 
F H 81 Taradn 
F 17 S> DM 
C 14 E7 Wanda 

a w 90 veaca 
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an o 32 WBf«M 
C 1 34 Wufttagnn 
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aH M v y Haw fcf 


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Summit agrees 
on Germany 


C 0 92 

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i Wdr FpFeg KIM I 
tarT'Dada 


Continued from Page l 
manys for reunification, he 
added: “The problem is there. 
Right now it has crystallised 
to a great degree.” 

He warned that the process 
towards creating a "common 
European home” could be 
upse t if t he question of Ger- 
man reunification was pushed 
too far. 

Mr Mit terrand expressed his 
understanding of the German 
desire for reunification, hot 
said “there can only be demo- 
cratic changes, only peaceful 
changes.” 


going to, but that’s simply non- 
sense" 

The exact level of oversub- 
scription will not be 
announced until next Monday, 
at the same time as the Gov- 
ernment will make known the 
different ways that the 10 com- 
panies will allocate shares. 
Although stock market deal- 
ings are to start the next day, 
December 12, shareholders will 
have to wait until just before 
Christmas before receiving 
share certificates. 

Arrangements whereby i 
shares are clawed hack from 
overseas investors and made 
available to the public depend 
on demand for the aggregate 
number of shares in the com- 
panies. 

■ But clawback from UK insti- 
tutional investors hinges on 
subscription for shares in the 
separate companies, which 
may have varied widely. It is 
triggered when an offer is 
more than 2.25 times sub- 
scribed by the public. The pub- 
lic could own a maximum of 47 
per cent of the shares on offer. 

On the indications of the 
queue in the City of London, 
people from all walks of life, 
not all of whom agree with the 
principle of selling off ■ the 
water companies, have proved 
keen to benefit from the flota- 
tion. 

Mr Dave Robbins, a video- 
tape editor, said: “I disagree 
with privatisation on principle 
but if the Government is going 
to give money away I might as 
well cash in on it." 

By no means everyone was 
buying the shares with the aim 
afa quick profit 

A female newspaper-seller 
said: “This is the first time I’ve 
done this - 1 was told there’d 
■ be a queue, but not this long, 
ni probably hold on to the 
shares.” 


Japanese 

economic 

growth set 
to outstrip 
forecasts 


By Robert Thomson 

in Tokyo 


Land prices in 
Tokyo surge 
again after loll 

By Stefan Wagstyl in Tokyo 


LAND PRICES in Tokyo are 
rising a gain after an 18-month 
lull, in spite of measures by the 
Japanese Government to con- 
trol increases and stamp out 
speculation. 

Japanese estate agents ray 
sharp price rises in provincial 
cities, catching up with past 
increases in Tokyo, could stim- 
ulate a new round of price 
rises in the capital. 

However, the general view is 
that urban land is unlikely to 
triple in valne in the 1990s as it 
has in the 1980s. 

Many agents foresee a period 
in which buyers become 
increasingly selective, seeking 
well-sited properties and ignor- 
ing those that they might have 
bought at the height of the : 
speculative boom two years i 
ago. The estate agents’ views , 
will reinforce calls for more 1 
government action to increase 
the supply of land to the mar- 
ket and stem demand in large 
cities. So far, the Government 
has largely relied, with same , 
success, on pressure on banks 
to cut reel estate lending. 

However, the Government is 
now expected to consider 
tougher measures, including a 
revision of tax-breaks on farm 
land in urban areas. Mr 

T VwMlri Kfltfn. the P rime Mfaifl- 
ter, yesterday agreed to hold a 
special rahfnpt nwwting hi thw 
next two weeks on land issues. 

The Japan Real Estate 
Research Institute, a private 
research centre, said Tokyo 
prices had, risen by 0.4 per emit 
for commercial land and 0.3 
per cent for residential land in 
the past six mon t hs, after 13 
months of steady decline. 
Prices in the central shopping 
area of Ginza and in Marunou- 
chi, the business district, rose 
28 per cent However, In the 


same period, prices in the 
Osaka region have jumped 
between 20 and 21 per cent 

The Japan Real Estate Com- 
panies Association said yester- 
day it was very concerned that 
increases in provincial cities 
would feed through to Tokyo. 

A spokesman said prices in 
Osaka, traditionally 60 percent 
of those in Tokyo, were now 
closer to parity. The associa- 
tion forecast Tokyo prices 
could rise S per cent in the 
next year, but increases in' 
prime areas could be higher. 1 


That’s BTR 


The ghost of 
Dixons’ past 


THE Japanese economy grew 
2J9 per cent in the third quar- 
ter, suggesting that growth for 
the year win outstrip most pre- 
dictions. 

Consumer spending has also 
rebounded after a slump 
brought an by the introduction 
of a consumption tax earlier in 
the year. Figures released yes- 
terday by the Government’s 
Economic Planning Agency 
showed a second quarter con- 
traction of 08 per cent in GNP 
to be an aberration. The 
agency had predicted that 
g r owt h for fiscal 1989 to end 
March would be 4 per cent, but 
now plans to revise the figure 
upwards. 1 

The effects of the 3 per cent 
consumption tax, introduced at 
the start of April, have worn 
off and expenditure rose 2 per 
cent quarter-to-quarter. Private 
investment in pfant and equip- 
ment showed a 7.3 per cent 
increase, with a 21 per cent 
increase in private housing 
investment. 

Economic growth for the 
three quarters has totalled 4 JB 
per cent Growth of less than 1 
per cent in the final quarter 
will produce an annual figure 
that exceeds most government 
and private expectations. 

Dr Kenneth Courtis, chief 
economist at DB Capital Mar- 
kets (Asia), said that Japan 
had entered a long-term con- 
sumer spending binge »lrin to 
that of the US m the 1950s. “In 
the future, we will look bads 
and regard this as a golden 
period,” he added. The sus- 
tained Investment Of Japanese 
companies suggested they were 
re-positioning themselves for 
long-term growth, while rela- 
tively low public expenditure 
levels indicate that the Govern- 
ment is ready to “support the 
economy an demand.” 

Ms Chiharu Somite, of UBS 
Phillips & Drew, said that 
growth in the third quarter 
was “stronger than expected” 
and that “private consumption 
growth was very strong.” She 
expects a slowdown in the final 
quarter, and predicts that 
growth for the year could be 
around 5 per cent. 

“The economy can’t main- 
tain this pace for too long. We 
are looking for a slowdown,” 

She aaifl- 


The jump in Dixons* share 
price yesterday to 18 par cent 
above the Kingfisher offer 
looks doubly surprising. It is 
by no means clear bow the bid 
is to get past the competition 
authorities: or if it does, why 
Kingfisher should have to pay 
much above its opening shot. 
The combined business would 
have a quarter of the UK mar- 
ket, five times the share of the 
nearest competitor. Kingfisher, 
points to the emerging retail 
importance of the electricity 
boards. But when Dixons hid 
for Woolworth three years ago. 
it felt it prudent to pre-sell 
Comet; since then Dixons has 
bought wigfeDs and Kingfisher 
has bought Laskys. 

At 120p, the offer is dose to 
20 times this year’s earnings 
for a company which faces at 
least one more year of dreadful 
trading Given the history of 
rancour between the two, Dix- 
ons might well seek an over- 
seas rhflmpinn But it is not 
clear who might enter the lists, 
especially given that King- 
fisher not only stands to make 
greater savings than anyone 
else bat presumably has a 
more intimate knowledge of its 
target 

It does not necessarily follow 
that Kingfisher i* wise to want 
Dixons in the first place. Even 
at the opening 120p, its 1990/91 
earnings could be diluted by 10 
per cent or more. Boots 
with Ward White, it is playing 
the contrarian and seeking to 
buy towards the bottom of the 
market In the process, it risks 
faring the last of its /fafan rii n n 
strength as an asset play. The 
real question, though, is 
whether Kingfisher’s manage- 
ment is entitled to the mar- 
ket’s patience for the two or 
three years It would take for 1 
the strategy to pay off. On its 
record to date, the answer 
might be yes. 


Share prices letadm to the 

FT-A Stores Index * 

110 



premium should be 20 to 30 per 
cent The tricky bit is whether 
the market will, stay relaxed 
for long enough about the 
economy and the kind of 
results that Saatchi and Norv 
cros produced yesterday for 
small shareholders to take 
their profits. 


Norcros 

Just two years ago Norcros 
narrowly escaped a bid from 
Williams Holdings- It has done 
little to justify shareholders’ 
faith since then and. is now 


the 1987 Finance Act, which 
allowed companies. to Mfaet 
their ACT liability against cap- 
ital gains tax. The degree of 
equity between all parties '.;Jt 
less certain. If everything goes 
to plan Mr Rttblat, fate family 
and partners will end up In 
late 1994 with 27.3 per cent ec 
New British Land, tiwjtww 
company carrying mu British 
Land’s development pro : 
gramme. This arrangement te a 
much better deal for public 
shareholders than LWT’s 
recent restructuring scheme; 
but It also looks like the plan's 

most obvious; weakness, in 
ins titu tio n al eyes. ' r 
Not thatJHr RftUat’a scheme 
Is a bad one; ItoagB^ateula t ion 
suggests the JStftish Lend 
companies* shares ^pouM trade 
at well over 8* >%i«*ragnte, 
compared with- November's 
level for British of 32Qp 
or so. The aftag, impeding 
other property co m pa nies from 
following suit, may simply he 
in their more complex 
finances. It is hard to see Land 
Securities, with £780m of mort- 
gage debentures In issue, jug- 
gttng its structure.so adroitly.: 


capitalised at less than 60 per 
cent of the value erf the bid. 
The fact that fat still needs to 
be shed in the ceramics divi- 
sion makes one wonder 
whether the bid delivered a 
sufficient shock to the com- 
pany’s system. Michael Doh- 
erty, appointed as chief execu- 
tive last year, may have been 
unlucky to hit .a building sec- 
tor slump so early in his ten- 
ure. But his bravado in main- 
taining the interim dividend cm 
earnings down 41 per cent 
could look foolhardy by the 
time of the full year figures. 
Some analysts think that earn-, 
ings, after redundancy costs, 
will not cover a maintained 
final. The bid rumours have 
duly started a gain, 


Saatchi 


Water 


It is almost like old times; 
queues on the City streets fin a 
privatisation and a high street 
bid battle. The institutions are 
flush with cash, the FT-SE 190 
is within 3 per cent of its 
alt-time peak and all Is right 
with the world. The Govern- 
ment must be especially 
pleased that the popular capi- 
talism bandwagon is toning 
again, thanks to the simple 
device of selling water cheaply. 
The signs are that the overseas 
clawback will be triggered - 
meaning that at least £2.1bn 
has been offered for the partly 
paid shares and that the final 
figure will probably be sub- 
stantially higher. If the stock 
market maintains its euphoria 
till next Tuesday, the first day 


British Land.. 

Ritblat’s first Law of real 
estate finance sounds straight- 
forward enough. Tax-driven 
some its finer points may be; 
but Mr Bithlafs pjfaft to break 
British Land in two and sell 
some 2790m of ‘investment 
properties rests on a simple 
proposition. If the stock mar- 
ket chronically under rates 
large property companies, the 
management must rescue lost 
shareholder value; if that 
means semi-liquidation, so be 
ft. 

At second glance the picture 
is less dear. The scheme is cer- 
tainly tax-efficient, owihg to 


While '3aatdrfl l .;fBll yen 
results were not modi worse 
than expected, the share-price 
reaction was a good deal bet- 
ter. Even be fore thfr kit c he n- 
slid; type write-offs, attribute 
able profits, were only xsm; 
after than, fte-ngt loss teas 
equal to otxh* eighth of the 
grotto’s market value. The 
shares rose J > to 283p,. giving 
a prospective .multiple of 
around 30 and a yield of under 
5 per cent - oddly- generate 
for a company with negative 
net worth and net debt at ova: 
tia>m and rising - - 

If the. speculators' are push- 
ing -the shares in hopes of a 
bid, they could be disap- 
pointed Too much needs doms 1 - 
with the group as it stends/ fit 
particular,- the consultancy 
businesses need to. b& eoLd aa a 
matter .of some urgency. 
Although Saatchi r professes 
itself relaxed abofrt Interest 
cover, ft cannot afpreseut be 
much over tWkJ&"Dependfng 
on the prices fetched and the 
tinting, the remaining advertis- 
ing business could still have its 
attractions. But to justity any- 
thing like the present share 
price, the recent management 
changes most be seen to be 
effective. Like Amstrad, 
Saatchi appears to have grown ’ ' 
beyond the limits of Its original 
management; shrinking it bad: 
to size is a task for the new 
team. ' - r . 


FIDELITY INTERNATIONAL 


GLOBAL 


INVESTMENT 


MANAGEMENT 


Fidelity is one of the world’s leading Investment 
management orga n isations with a network of strategically 
pkced fund management operations covering the globe. 

angle- m i nd ed dedication to providing superior 
investment performance is the foundation of our , business. 
With one of the largest buyskte research teams in the werid, 
the resources we commit to generating sound, original 
investment ideas are probably unsurpassed in the fund 
management business. 


And, because Fidelity Is a ptivaidy-owned company, 

wete better able to invest in the people and systems co eacd in 

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investment manager. 

ITS no wonder companies within the Fidelity 
Organisation together manage over J115 billion. 


U 


■w- 


. i i . \ 

r K-; 


TflZ VISION TO SEE FURTHER. 
THE RESOURCES TO LOOK CLOSER. 




LONDON BOSTON BERMUDA TOKYO SYDNEY HONGKONG TaIFEI JE 


»S BY LUXEMBOURG-.- • 


IN 


/ 





I 




HuH City Council 

Department of Industrial Development 

Tfcl; 0482 222626 


FINANCIAL TIMES 


COMPANIES & MARKETS 


® FINANCIAL TIMES 1989 


Thursday December 7 1989 


19 


Keep on top of the market 

01-2533379 





INSIDE 


Tiphook manages to 
double its money 

;■ 'DpbooJc. the UK con- - 
« tziiner rental company 
Involved In a long-run- 
ning Si.Q2bn bid tor Sea 
Containers, more than 
doubled pre-tax profits 
to £10.1m In the halt* 
year to October 31, 
against £4.5m in the 
equivalent period. Mr 
Robert Montague (left) 

Tlphook's chairman, 
said the changed eco- 
nomic climate had not had an adverse effect 
oh Tlphook’s core- business in the first half, 
thanks to strong financial controls. Page 29 

S h ar p* drivenupthewail : 

As East Germans 
clambered over and 
through the Berlin 
Wad fast month, the 
West German bourse 
rose to toe occasion. 
It celebrated with a 
surge in trading 
activity and rising 
share prices. Volume 
climbed to near 
record levels doting 
the three days that 
straddled the breach- 
ing of the Wall. This 
left Germany as the only European market 
showing an increase in turnover compared 
with October, writes Alison Maitland. Page 44 


Shopphifl for Bloo ml n qdal * r s 

As Christmas shoppers pour Into Blooming- 
dale's, the future of .toe prestigious US depart- 
ment store chain is being decided behind 
dosed doors by people with no time to loin the 
queues- Btoomingdale’s was put on the block 
in September by its parent ihe Canadian prop- 
erty and retailing group Campeau and tomor- 
row will see the first round of bids. Already, 
writes Karen; Zagor, them .are .reports that 
offered prices will fall short of Campeau 's 
expectations. Page 20 


US 

Perkln-Bmer, a medi- 
um-sized Instrument 
maker, is one of the few 
remaining US com pa- - 
dies making the 
machine toqfsthat semi- 
conductor companies 
use to manufacture 
microchips Its latest 
- - vAfflttaScan, .- 

puts.it at Jhe front or* 
field which underpins 
modem electronics Why 
then is toe US on the point of permitting the 
group to aelUts semiconductor unit to a for- 
eign, and almost certainly Japanese, company? 
-How many such firms do ve have to lose 
before it becomes Important?" says Or Robert 
Noyce (left), president of toe US .semiconductor 
company Sematech and co-inventor of the sili- 
con chip. Pago 35 



rates 
bonds- 
Bropean options aw*' 
ft-a tafia® 

FT-A wrid taficos 
FT M bond sarvfca _• _ . 
Rnsnda fttens 
ftnSgn aoUa npo a 
London racant bows . 


a tinted stare smtoo 
24 London traded options M 
48: London Insfit options. 24 
M ISonsy nukes . . « 

44. Nan tat bond bans . 24 

Wodd cantnodby prices . 22. 
48 - warid Stack akttedcn 41 

48 UK dMdnds amomoad 28 

21 UAtrats 24-17 


AlrCanadn 

Albion 

Avon Rubber - 
BTP 

BloomfngdaJe's 

Bogod 

Builder Group . 
Caflyns 

Canadian Pacific 

Cape - 
Charterhall . 

Christian Stamen 
Control Data .. 
Cranswtdc MM 
Cray Electroiuca 
Crystalale- Holdings 
Douglas (RM) 

Brnap 

Embassy Property 
Equity Consort _ - 
Frank B Hilt ' 

GAN 

GPA Group 
Greene King . 
Hardanger Properties. 
Hufico 


21 James Handle Inds 
30 LStham (James) 

SO Leopold (Joseph) 
as Monks O Crane 
20 Monotype 
29 NM&Postbank ‘ 

29 Navigation Mixta . 

30 Norcroe • 

20 Nontoanken — - 
30 Northamber 
21. PKbanken 
28 Pappino's Pizzas 
20 ParownonAGB 
20 Psridn-Elmer 
>20 Perkins Foods - 
30 . Reeves Comma Corp 
jo Rpwflnaon Securities 
28 Saltire Ins Inva •’ 

30 Sea Containers 
28 Stieareon Lehman . 


30 


21 

21 

28 

21 

30 

21 


21 


21 Thames Tetovtaon 
21 TTphook 
. 28 Tottenham Hotspur 

30 UMECO .. 

29 Ulster Bata: 


nUNKHMrpNO 


4« + 
SHMaW ■ 440 + 

Drimfer-fanz - 720 + 
Ktaat 437 + 

UmatasMdi .585 + 
WkM _488 + 

MBWYOnccto , 


13 

22 

ar 

29 

20 


CawtenWe + 

McCratf HI 63V + 

13V + 


apwEqDta 5»*a“ 

wtaMtfw «- - 

BM ^ 

Minimi 


£ 

f 


Blip 


an + ».r 


Hsw Vorit prices at 1238 


LONDON (Mass) 


BTR 

Bit Lata 


9. 

46 

22 

14 

22 " 


464 
403 
302 

CbStaWs 64 
Damns T41 .. . 

Baa 1 ■ '177 11 

FW tterfb,. , -218 +■ W 
atnrttaid.' sw + to 
awtai (tail 2S4 •+; io 
H awnss a nW 'BSD + .40 

Mtaa it | 

238 +. 18 


Whoosoo . 


SO 

iges yesterday 1 

an 

m 

+ 

Rm»U- 

3S3 

+‘ 40.1 


1W 

+ 12 a 

8WB 

«K 

+ 42 

i»M 

791 

- 204 

nimrM 


McUOan 

iaod 

+ .140 

EztfGto 

1750 

+. 170 

tattlnn 

mo 

-(--180 

KUd Stays 

1390 

+ 140 

MW GV* .. 

15B0 

- 110 

Mental 

1700 

- m 

Ftaw 

780 

+ 33 

State 

283 

+ 15 

am .... - 

«9 

+ IB 

TfanQB ' 

ns 

+ n 

Titan fa*. 

383. 

+ 10 

YMKCtaf . 

• 191 

+ 9 

Man* 

rate 

740 

+ 15 

Anantm . . 

384 

- '7 

chart* w- . 

296 

-... 0 

KfeoBster 

290 

- 17 


Saatchi cuts final dividend by 7p 


By Alice Rawsthom in London 

Saatchi & Saatchi, the 
communications and consulting 
group, has ended the toughest 
year in its history by cutting its 
final dividend from 8-Sp to L6p, 
reducing the total dividend from 
i6p to dp. 

After nearly two decades of 
growth Saatchi plunged Into 
problems last year. Its communi- 
cations compa nie s were hit by 
rising costs and it experienced 
fflffirafities with its management 
consultancies, which it put up tor 
bi riw> summer. 

The group a fan in 

pre-tax profits to £6L3m (£116.4m) 
an revenues of £97&5m (£S822m) 
in tiie year to September 30. It 
an overall loss - 


after tax, exceptional and 
extraordinary items - of £S&Sm 

from profits of £75. lm last year. 
Fully dfhrtnrt earning s per shar e 
fell to 23.1p (44JpX 

Saatchi’s shares, which have 
fluctuated wildly to recent weeks 
on hid speculation and concern 
ahead of the results, rose 15p to 
283p yesterday- Analysts to Lon- 
don and New York dismissed yes- 
terday's Increase as speculative 
buying. 

The group described 1988 as “a 
tough year when many difficult 
decisions h a v e been made." It 
CUt COStS in rnmmimSrfltinm and 
fbriitnH to withdraw from consul* 
fancy. fr«s *i«n reshuffled 

senior manflgpmant . Fjve direc- 


tors Have left the main board t hfc 
year. 

Two months ago Ur Maurice 
Saatchi, the chairman who 
founded the company with his 
brother Charles, relinquished his 
role as chief executive to bring In 
Mr Robert Louis-Dreyfus from 
the Dun & Brads treet market 
research group. 

Mr Charles Scott, who worked 
with Mr Louia-Dreyfus at D&B, is 
joining Saatchi as finance direc- 
tor. 

Mr Richard Dale, advertising 
anlayst at Janies Capel in Lon- 
don, said Saatchi had made a 
"clean sweep" in its restructur- 
ing programme and should be 
able to concentrate on revenue 


growth once the consultancies 
were sold and its borrowings 
reduced. 

Saatchi began "a major cost 
control programme" In the sec- 
ond half. It has reduced central 
staff by 25 per cent and closed its 
corporate office in Washington. It 
also cut costs to the communica- 
tions division - which includes 
advertising, public relations and 
design - by 5 per cent to the 
fourth quarter. This helped to 
increase trading profits from 
communications to £47*2m in the 
Rprrmd hair, double those of the 
first half and ahead of last year. 

The cost of re struc turing and 

companies represented £29.5m of 


its exceptional items of £39J5ra 
C£2L6m credit). 

Saatchi has also reorganised its 
consultancy interests. The cost is 
expressed as an extraordinary 
item of eg>m. This includes writ- 
ing off £io.7m on its Investment 
in the Information Consulting 
Group, which it has agreed to sell 
to McKinsey tor S12m (£7.7m). 

The consultancies were put up 
for sale in June but so far Saatchi 
has sold only three small compa- 
nies. Analysts expect Saatchi to 
raise between £l50m and £200m 
from the disposals, but it is said 
to be struggling to find buyers 
for the bigger businesses. 

Lex. Page 18 
Background, Page 22 


Kingfisher turns the tables 
on Dixons with £568m bid 


By Maggie Urry In London 

BATTLE broke out to the British 
high street yesterday when King- 
fisher, the retail group, turned 
the tables on Dixons by launch- 
ing a hostile takeover bid worth 
£568m (8890m) tor the electrical 
goods retailer. 

to 1988, Kingfisher, then called 
Woolworth, fought off a £L8bn 
bid from Dixons to a battle 
remarkable for the acrimony 
between the personalities 
involved. 

Mr Geoffrey Mulcahy, chief 
executive of Kingfisher, said he 
tpiapiiffBAii Mr Stanley 
chairman of Dixons, early yester- 
day and. that the conversation 
was “extremely courteous." Mr 
Mulcahy said the bid was “cer- 
tainly not revenge. We believe in 
doing things that are commer- 


cially sensible." 

Dixons, howev*"*. Raid that the 
bid was “an opportunist attempt 
to deprive shareholders of the 
benefits of the longer term 
growth prospects of the com- 
- pany." It said the bid would be 
“strongly resisted.” 

The dramatic in the 

fortunes of the two groups fol- 
lows the sharp decline to the 
market for electrical goods where 
Dixons, which also owns Currys, 
is toe leader. 

The squeeze on consumer 
spending from high interest rates 
iwt particularly- hit retail «m 1 pr of 

high-priced. goods. In 

tiie electricals market there has 
been a rash of price-cutting and a 

Twr-Jr of PTP i Hny new products to 

entice shoppers. 


Kingfisher, through Comet, is 
the second largest player in toe 
electrical market It also owns 
the Woolworth variety-store 
chain , along with B & Q, the lead- 
ing do-it-yourself retailer, and 
Superdrug, the market leader in 
the drugstore sector. Kingfisher 
has seen a marked revival since 
it was formed through the buy- 
out of Woolworth to 1962. 

Mr Mulcahy described the bid 
, as a strategic move which would 
give his company market leader- 
ship and enable it to restru cture 
a large part of the electrical 
retailing sector into a “more effi- 
cient and profitable business.” He 
said he did not expect the hid to 
be referred to toe Monopolies and 
Mergers Commission. 

Lex, Page 18 


That’s the wonder of 
Woolworth’s revenge 

Maggie Urry explains how the UK stores group has 
risen to bid for its one-time predator ■' 


T he amazing reversal of for- 
tunes to the tale of King- 
fisher and Dixons would 
provide a plot for the sort of 
paperback novel businessmen are 
supposed to read on long aero- 
plane journeys. In little more 
than three years the underdog 
has become the top dog and the 
biter has been bitten. 

to tb«» summer of 1986 King- 
fisher - then called Woolworth 
— was fighting for its life a g ainst 
a tod from Dixons. It was one of 
the most hotly contested British 
takeover battles. 

Yesterday's reversal of roles 
Qtostrates the contrasting for- 
tunes of the two groups since 
then, to particular, it underlines 
the success of 
Kingfisher’s strat- 
egy off diversify- 
ing away from the 
Woolworth vari- 
ety stores - a 
strategy in its 
Infancy at the 
time of the 1986 
tod. 

It also demon- 
strates how rap- 
idly an acquisitive 
stock market 
favourite like Dix- 
ons can fen from 
favour when the 
trading cycle 
turns against it. 

Kingfisher's tod 
is dead? designed to gfve it mar- 
ket leadership in electrical retail- 
ing. But the battle launched yes- 
terday has a long way to go. 

" *tely dismissed it 
and the bid may 
referred to the Monopo- 
lies Commission. 

According to estimates by Ver- 
dict, the retail research group, 
the combination of Kingfisher’s 
Comet chain, and Laskys - 
which Comet bought in October 
— ■ with Dixons wd its offshoot, 
Coreys, would give a 26.4 per cent 
share of the UK electrical mar- 
ket Mr Geoffrey Mulcahy, King- 
fisher’s chief executive, said yes- 
terday: “We do not think tills will 
be referred." He said his estimate 
of the combined market share 
was-22 per cent. 

There would be no other chain 
with more than l per Cent of the 
market, barring the electricity 
boards’ showrooms and Rumbe- 
lows, Thom EMTs loss-making 
chain which is rumoured to be up 
for sale. 

The electrical retail market is 
currently in turmoQ. with sales 
stffl felting under the weight of 
Ugh interest rates, a lack of new 
products io excite interest, and 
overcapacity in tiie retail market 
causing savage price cutting. 

But . Dixons behaves the sector 
wiQ eventually r etu rn to growth 
as new technology brings in a 
wave of fresh electrical gadgets. 
It will ask why Kingfisher should 
get tiie benefit of this upturn. 
Buying Dixons would allow 


Kingfisher to restructure the 
electrical retailing sector to its 
own advantage; rebuilding mar- 
gins and taking out Some excess 
capacity. When sales recover 
Kingfisher would enjoy substan- 
tial profits from the business. 

In doing this it would be 
repeating the pattern it has 
adopted in other sectors si nc e it 
began its move away from reli- 
ance on the tired old Woolworth 
variety store formula. In each 
chosen sector the aim has been to 
make itself the market le ader . 

Woolworth, formerly a quoted 
company cmrtmlteri by an Ameri- 
can parent, was bought out in 
1982 by a management team 
hacked by institutions. 



Dixons’ Stanley Kalins, (left), and Geoffrey M ulcahy 


The Woolworth chain had been 
run almost into tiie ground and 
the new owners began' a strategy 
of revamping the Woolworth 
stores - concentrating on fewer 
lines — and building up other 
retail “brands”. B&Q, its 
do-it-yourself business, had been 
aeqiiirad by the old Woolworth 
management - in a tare flash off 
genius - and is now been built 
into the market leader. Comet, 
the electrical retail chain, had 
been bought to 1384 and can now 
rfabw to be the leading out-of- 
town electrical retailer, though 
the Dixons/Currys combination 
holds s w ay in the high street In 
tiie past few years the group has 
also built up Superdrug into 
what is damied to be the UK’s 
biggest drugs stores ehatn 

But when the bid from Dixons 
came in 1986 this strategy had 
yet to produce significant results. 
Dixons, by contrast, was riding 
high- Beloved of the City ana- 
lysts, the shares had risen 
sharply during 1965 and tiie early 
months of 1986. Currys had been 
acquired at the end of 1964 and 
Dixons’ profits were bounding 
ahead. The consumer spending 
boom was raging, and sales of 
electrical goods were one erf toe 

Train be ngfadarteft. 

The bitterness <j£ the battle was 
underlined within davs of the bid 
being launched when Woolworth 
issued a writ against Mr Stanley 

TTglmg | Taxons’ r j iat png" claim- 
ing “injurious falsehood". 

Luton Crown Coart sent a 


Secu rit y "owgriltant tn jail fhr pnt- 

ting a bug in a biscuit tin to tap 
the telephone of a man who had 
left Dixons to work for Comet. 
That incident took place after the 
Wd had foiled to July of 1986. 

But the bid was not just about 
personalities. Much heat was 
generated through attacks and 
count er-atta cks on each side's 
retail strategies. 

The bid marked the start of 
Dixons’- problems, and the end of 
Wootworth’s. Dixons profits car- 
ried on upwards for a while. And 
it moved into international retail- 
ing by the acquisition of Sfio, a 
US power retailer. Ab one analyst 
put ft “Dixons took its eye off the 
ball, it got too 
involved in bid- 
ding for Wool- 
worth.” 

Dixons also 
made a serious 
error to not merg- 
ing the Dixons 
and Currys busi- 
nesses early on. 
The move to inte- 
grate the two 
chain’s manage- 
ment, buying and 
distribution 
system s, was 
eventually started 
to the spring of 
1988, and the ben- 
efits have yet to 
flow. When sales of electrical 
goods started to slide - a time 
which Dixons has always pin- 
pointed as Hat** of fhft stock- 
market crash in October 1967 - 
Dixons’ UK retailing arm was to 
poor shape. 

Analysts believe the bulk of 
the blame for Dixons’ problems 
can be put on the market, rather 
than on Dixons manag ement. 
“The management is just as com- 
petent as it was before the mar- 
ket fell,” says one. “Dixons has 
not lost market share.” 

However, there Is no denying 
the group’s profits are still fait 

tog. After rushing upwards from 
pre-tax profits of £20.5m in 
198S-84 to £1Q2A to 198887, profits 
first stagnated, at £103.1m in 
1987-88, then fell to £7&4m to the 
period to April 1989. 

In September Mr Kahns told 
the annual meeting that sales in 
toe UK had weakened yet fur- 
ther. Now analysts are guessing 
at profits of around £40m in the 
current year, but suggesting that 
the UK retail business will make 
a significant loss within that 

Meanwhile, Woolworth has 
been racing ahead. Profits, before 
tax and exceptional items, have 
risen from £5&8m in 1984-85 to 
£186An. to the year to end Jan- 
uary. Pictures in the 1989 
accounts showed the directors 
positively beaming at their suc- 
cess. And while Mr Kalms’ salary 
was falling, that of Mr Mulcahy. 
Kingfisher’s chairman designate, 
has been rising. 


NMB Postbank prices 
shares at FI 46.50 for 
partial privatisation 


By Laura Rattn in Amsterdam 

A SHARE PRICE of FI 46.50 
(S2&2Q) was announced yesterday 
for about 30 per cent of the 
shares of NMB Postbank, the 
newly merged Dutch bank which 
is being partially privatised 
through a FlL3bn international 
offering. 

The 28m shares are the second 
largest equity offer and privatisa- 
tion in Dutch history, following 
the FlL5bn sale of one-third of 
DSM, the company, in 

September. 

NMB and Postbank formally 
merged to October, forming the 
biggest bank marriage ever to toe 
Netherlands. With total assets of 
FI I69bn, the group ranks number 
four at tonne and among the top 
25 banks to Europe. 

The issue price was considered 
generally in line with market 
expectations, although hardly a 
generous discount to the closing 
price of FI 47 the day before. 
NMB Postbarik’s share price 
rfnwpd at an unchanged FI 47 yes- 
terday, prompting market specu- 
lation that it was. being snp- 
ported. 

About 46 per cent o£ the shares 
are already publicly traded and 
24 per cent will remain in Dutch 
Government bands after the pri- 
vatisation tranche. 

Brokers and analysts expect 
the issue to be heavily oversub- 
scribed by investors in the 
Netherlands and abroad, drawn 
by a record FI 12m advertising 
rampntgn aime d to large part at 
Postbank’s 6m account holders. 
Allocations will be announced on 
Monday. 

NMB Postbank is seen by 
many as a promising partnership 
between two complementary 
banks with good growth potential 
anil 8 aolfd flnawrfal position — 

pitched at an attractive price. 
NMB was the third largest com- 


mercial bank in the Netherlands 
with expertise in market niches 
such as asset trading. Postbank 
resulted from the 1986 merger of 
the portal giro system and the 
National Savings Bank. 

The biggest challenge, accord- 
ing to many analysts, is marry- 
ing the government-owned Post- 
bank with the more Innovative 
and dynamic NMB. 

The decision against a fully 
integrated merger has raised 
questions of how large the cost 
savings will be, since no more 
than 200 jobs out Of 23,500 are 
expected to disappear. 

Mr Wim Scherpenhuijsen Rom. 
chairman of NMB Postbank, 
insisted yesterday that "a merger 
is not a condition for synergy. 
Activities can be transferred 
between the two banks and they 
will share staff." 

He sidestepped the question of 
whether NMB Postbank - which 
has predicted 10 per cent higher 
earnings to 1990 - would be less 
profitable than NMB, which has 
boosted net income much fester 
to recent years. 

Admitting Postbank’s sensitiv- 
ity to interest rates, he insisted 
that it would now be able to offer 
new services such as securities 
»nii insurance' broking and for- 
eign currency inwn«. 

About 60 per cent of the shares 
are being placed to the Nether^ 
hurts, Belgium and Luxembourg, 
with private investors receiving 
preferential treatment. The other 
40 per cent will be sold to institu- 
tional Investors abroad. 

The underwriting syndicate, 
which is being led by NMB Post- 
bank itself, can use 2m of the 
maximum 28m shares to cover 
short positions and thus under- 
pin the price in the after-market 
The syndicate Is taking a 3 per 
cent fee. 


Chrysler 
may sell 
aerospace 
operation 

By Anatole Kalotaky 

in New York 

CHRYSLER, the third largest US 
motor manufacturer, «aid yester- 
day it might sell its aerospace 
and defence electronics 
operations, estimated by some 
Wall Street analysts to be worth 
$G00m to $700m. 

The company suggested that 
management might mount a 
leveraged buyout for some or all 
of these businesses, the most 
important of which is Gulfstream 
Aerospace, a leading US manu- 
facturer of business aircraft. 

Mr Allen Paulson. Gutfstream’s 
chief executive and a main board 
director of Chrysler, said he bad 
temporarily resigned from these 
positions to avoid conflicts of 
interests, while he considered 
whether to make a bid. 

Mr Paulson, who ran Gulf- 
stream for many years before 
selling It to Chrysler in 1985, was 
thought to have been disap- 
pointed by Chrysler’s recent deci- 
sion not to pursue a proposed 
acquisition of Lear Jet. another 
business aircraft maker. 

For Chrysler, the sale of Gulf- 
stream and its other smaller 
aerospace businesses would 
reverse the diversification strat- 
egy of the mid-1980s, when it was 
generating excess cash flow, after 
recovering from near bankruptcy 
at the beginning of the decade. 

The company said explicitly 
yesterday that it was thinking of 
selling Gulfstream and its 
defence electronics operations to 
aider to “concentrate resources 
cm the core car and truck busi- 
nesses”. 

Chrysler insisted yesterday 
that the proposed sale was “not 
related to any cash needs." But 
analysts noted that it would 
mark Chrysler’s second major 
cash-raising exercise totn year. 

In September, the company 
sold half its interest to Mitsubi- 
shi Motors for $600m. recording 
an after-tax profit of $310m. 

In the next five years it will 
have to invest around $14bn on 
modernising its product line, 
although Mr Lee lacocca, its 
chairman, has forecast “fiercely 
comp etitive " conditions to the US 
car market. 

These factors could result in a 
cash squeeze, especially as Chrys- 
ler does not have the large Euro- 
pean operations which are help- 
ing to sustain profits at Ford and 
General Motors, its US rivals. 

Chrsyler is considering a push 
into the European market, based 
both on exports and a joint ven- 
ture with Renault 

Ironically, Chrysler's purchase 
<rf Gulfstream to 1965 for 9636m 
was largely funded by the sale of 
its European operations to Peu- 
geot the following year. 





Welcome to all multinationals 


new to this countiy . 

(You’re also welcome to use 
our tax capacity.) 

Even for multinationals, the cost of setting up a major 
company in the U.K. is sobering. 

Acquiring the necessary factories, plant and equip- 
ment can mean vast capital expenditure. 

All prior to profits being made. And hence before the 
benefit of a substantial tax capacity has been established. 

So will you have to write off writing down allowances? 

Not if you use our tax capacity. (Courtesy of 
The Royal Bank of Scotland Group profits, it's more 
than adequate to fund your acquisition programme.) 

Add to this our two decades' experience and 
commitment to the policy of making the lease fit the 
business need (not the other way round), and we think 
you've every reason to be talking to us. 

While we fulfil an all important task. Listening. 

So if your company is new to this country (or for that 
matter simply a business requiring to finance assets 
of £lm or more) speak to Tom Carr at our head office on 
0242 2244SS or Bill Lowe at our London office on 
01-623 4356. 

You can expect several things: advice that costs 
nothing, help towards building a sound financial base and 
of course a warm welcome. 


RoyScot Corpora re L easing 




ITS OUR BUSINESS TO HELP YOUR BUSINESS GROW. 

RoytaBttaLeMtagUnM. fte rftara dtoScottendNa 58013. 

A member of The Royal Bank of Scotland Groip. 


markr: 

o cn 

■■sf-tUil 

rived, 
-■»*» ‘ i 
A jJNSL 
hirr- 
t caun- 

C • IT 

{-are of 

-j ■ .», 

r 

-». iff 

'"St 

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in 


-1 










1989 FINANCIAL 
REPORT 


Scotiabank S 



(Canadian e thousands) | 

Pot tha financial vow ended October 31 

-1989 

1988 

Interest income 



Income from loans, excluding leases 

4 6.231.031 

$ 5,175.209 

Income from leasefinancing 

22,262 

23,589 

Income from securities 

958,695 

684,206 

Income from deposits with banks 

638*492 

491,711 

Total interest income, including dividends 

7,850,480 

6,374,714 


Interest expense 



Interest on deposits 

5,282,973 

4,044,409 

Interest on bank debentures 

155,848 

85,414 

Interest on liabilities other than deposits 

339,703 

796.949 

Total interest expense 

5,778,522 

4.326.772 

Net interest income 

2,071,958 

2,047.942 

Provision for credit losses 

895,375 

465,000 


Total non-interest expenses 1.661.683 1,403,194 


Net income before provision for income taxes 365.060 837,595 

Provision for income taxes 136,000 325.300 


Net income before minority interests 

in subsidiaries 230,060 612,295 

Minority interests in subsidiaries 8,243 6.648 


Net income for the year $ 221,817 S 506,647 


Preferred dividends paid . $ 34.574 $ 25,083 


Net income available to common shareholders 5 187,243 S 481,564 


Average number of common shares outstanding 185,149.293 175,612,516 


Net income per common share $ 1.01 S 2.74 


Common dividends paid $ 162,981 $ 132,591 


Dividends per common share $ 0.88 $ 0.76 


Consolidated Balance Sheet Highlights 


(Canadian 9 motions} 


As at October 3 1 


Cash resources 

Securities 

Loans 

Other assets 


Total assets 


Demand deposits 
Notice deposits 
Fixed-term deposits 


Total deposits "" ' r ‘ 

Other liabilities 
Subordinated debentures 
Capital 
-preferred 
-common 


Total tobffl ttes and capita* 


Now 1: 1©88:1l 

TTta Consolidated Financial S tat en wi m hamo boon baenbaw 

prepared in accordance with the Bank Act and Include common 

Tfte ossan end fcobrii ties end rosufca of upw scions of Che 

Bank end ItaaubafcSerles .Inv ee tm a n tm inaWawdcom- 

pantos are acco u nted Toron the equity b aeia TV”*? 

aonooted 

Nora 2: the year a 

As at October 31, 1989. 187,004,228 common Included I 

abama imm teoued and outatandine (Octobar 3 1 . 


CmouOva Qraeae l.^NotnaHhCnitk BimMaOtn 

ScoHPta C«oaiiO*«*k UnOaaKM 

MUngSmiM* OUMikPumnn CMM.OM>v MarJeoCky 

Tonsn. Canada AtHn-Atew. EOnbtKtA FrartcMt. NawYmfcPa 

MBH1H1. Banekok. M»ng, Cfciran* Hong Kong. «» 


8.750 

7,439 

53.990 

10.822 


81,001 


3.828 

17.291 

39,806 


60,926 

14,876 

1.758 

550 

2,892 


81,001 


' 8.194 
7,238 
50,815 
8.428 


74,675 


3.853 

15,842 

39.088 


58.583 

11.626 

1.293 

360 

2.823 


74,675 


1 988: 1 S3.024.ee 1). The perehere statistics have 
baen baaed on the daily average of equivalent fully paid 
common ahoma. 

Now 3: 

Tha SI W l nAJ ai a " Autfltora have wporwd on tha Cotv 
aoHdatad Financial Statamoow of tha Bank aa m and tor 
thaysar ended October 31. 1989. Their report la 
Included In the Annual St a tement. 


THE BANK OF 
NOVA SCOTIA 


ThfsanrK3urKement appears as a matter of record only 


November 1989 


DM 350,571,000 


■ferm Loan FbcBtty to 


Rover GmbH 


With funds to be used for construction of new 
Wbrld Headquarters and Central R e se a rch Facfltty of 


Rover Group Inc. 

Arranger and Agent Bank 

Dresdner Bank AG 


Funds Provided By 

Dresdner Bank AG 

Algernon© Bank Nederland (Deutschland) AG Bank of America NT &SA 

Schweizerische Kredttanstatt (Deutschland) AG 
National We s tmi ns te r Bank AG Waat deut acIw LwK tosfaankGirozentyale 


Dresdner Bank 


FINANCIAL TIMES THURSDAY DECEMBER. 7 im 


INTERNATIONAL COMPANIES AND FINANCE ^ 

CanPac to swallow 
‘poison pill’ and take 


Bids for Bloomingdale’s 
set to miss $2bn target 


By Karen Zagor In New York 

THE FIRST round of bids for 
Bloomingdale’s, the prestigious 
US department store chain, is 
due tomorrow, and there are 
already reports the offered 
prices will fall short of Cam- 
peau’s expectations. 

Campean Corporation, the 
highly-leveraged Canadian 
property and retailing group, 
put Bloomingdale’s on the 
block in September to cut its 
huge debt burden and try to 
relieve its cash flow problems. 
At the time, Campean had 
hopes of getting as much as 
$2bn for the Bloomingdale’s 
chain. But analysts believe the 
price tag for the division is 
unlikely to be higher t** nT| 
$L5bn. it Is posable that 
die bids wzQ come in at rmfipr 
SUra. 

If no more than Slbn is 
offered for Bloomingdale’s, It Is 
likely that Campean will t»irp- 
the division off the mark a* and 
try to sell one or more of its 
other store divisions. Among 


the possible suitors for Bloom- 
ingdale’s is Japan's Tokyu 
Department Store, part of the 
huge Japanese transportation, 
retailing and leisure group 
which has the same name. 
Three other Japanese store 
groups are said to be interested 
in Bloomingdale’s. 

Other contenders for the 
group include Mr Marvin 
Traub, Bloomingdale’s chair- 
man, and the sentimental 
favourite, and Mr Joseph 
Brooks, who bought the Ann 
Taylor women’s clothing chain 
from Campeau. There is also 
said to be Interest from 
Europe, Australia and Canada 

Investors are already skittish 
about Campeau’s US holdings. 
Moody’s Investors Services has 
downgraded its credit ratings 
for Campeau's Federated 
Department Stores and Allied 
Stores to GAA, "about one step 
away from bankruptcy" 
according to Ms Pam Stubing. 
an analyst at the New York 


credit-rating company. Dim & 
Brads tree t, the credit-rating 
company, has said it can no 
longer provide its clients with 
guidelines on shipments to tha 
Campeau stores. 

This may have an impact an 
shipments for spring sales, but 
should not effect important 
Christmas sales. Factors, the 
financiers of the apparel indus- 
try, who check and guarantee 
credit, and provide advances 
against accounts receivable, 
have been keeping a tight rein 
on deliveries to Campeau 
stores since Bloomingdale’s 
was first put on the market. 

According to one analyst, a 
number of smaller vendors 
have already stopped shipping 
to the Campeau stores and 
some merchands are demand- 
ing wish on delivery. 

“We are continuing in a very 
prudent manner.*’ said Mr 
John BrooKHer, vice-president 
of marketing for Heller Finan- 
cial, one of Campeau's fedora. ■ 


property arm public 


Control Data names new chief 


By Roderick Oram in New York 


CONTROL Data has appointed 
Mr Lawrence Perlman chief 
executive, giving him the 
major challenge of reviving the 
struggling computer hardware 
and services group. 

He succeeds Mr Robot Price 
who led the company through 
a hefty restructuring in the 
mid-1980s which has failed so 
far to pay off through a re tur n 
to solid revenue and profit 
growth. 

Mr Price, who remains chair- 
man, had announced Ms inten- 
tion in October to step down as 
chief executive. The company 
launched a search for a 
replacement, but it was widely 
assumed Mir Perlman, presi- 
dent and chief operating officer 
since last December, was the 


loading candidate by far. Mr 
Perlman, 51, joined the Min- 
neapolis-based company in 
1380 as its general counsel. He 
maria his reputation as a man- 
ager by turning round Impri- 
mis, the company’s heavily 
loss-making disk drive (dera- 
tion and one of its core hard- 
ware businesses. 

Control Data sold Imprimis 
earlier this year to a competi- 
tor, Seagate Technology, a 
move for which Mr Perlman 
felt a “combination of sadness 

and vindication,*’ he «aid yes- 
terday. 

The money from the has 
left Control Data in a stro nge r 
financial position and under no 
pr ess u re to Tnakft fnrtfrar dis- 
posals. Now “we’re making 


dedakma from a strategic and 
not a financial perspective, - 
■ Mr Perlman ssl d 

He plans to accelerate the 
company’s growth in the area 
of computer-based services. 
Once a leading supplier of 
hardware, notably supercom- 
puters and disk drives, the 
company’s wne of equip- 
ment now is Cyber mainframe 
computers aimed particularly 
at scientific and engineering 
applications. 

He said he is seeking to 
ingffl three characteris- 
tics in the company: hi gh prof- 
itability; products and services 
which lead their markets and 
which are hard for co m petitors 
to challenge; and an employee 
oriented environment. 


By Robert Glbbens in Montreal 

CANADIAN Pacific, a subject 
of takeover speculation this 
summer, is taking steps to 
thwart any unfriendly suitor. 

The company will take its 
C$4bn ($3.5hn) property arm. 
Marathon Realty Company, 
public and will itself swallow 
an elaborate “poison p3L** ■ 

Mr William Stinson, presi- 
dent, he <Hd not know of 
any predators, but added that 
Marathon might also adopt a 
shareholders’ rights plan. 

CP owns 100 per cent of Mar- 
athon. Under the plan it will 
retain 20 per cent ownership 
and distribute 80 per cent of 
Marathon’s stock to current CP 
shareholders. Hie distribution a 
will be one-fbr-one, and at no 
cost 

Marathon stock, will then be w 
listed on the Canadian si 
exchanges. This wifi allow CP at 
holders to trade the shares if M 
they wish and provide an inde- 
pendent market valuation. M 

Marathon’s huge Canadian C 
i»mri holdings are being devel- in 
oped at a fester pace and some to 
may be sold. 

It’s portfolio includes 85 « 

nffw> buildings totalling llm ei 
sq ft of leasable area and 30 si 
shopping centres totalling 13m tc 
sqft. & also has vast land hold- « 
tn g g and substantial industrial od 
properties. 

Mr Stinson said the present u 
market value of CP shares eerir of 
ously under-values the Mara- pi 
thon assets. The distribution st 
wifi reflect true values more pc 




any predators In the market 


effectively. The distribution 
will take place in May 1990. if 
shareholders approve the p lan 
at the next annual meeting on 
May 2. 

CP said the book value of 
Marathon’s assets was about 
CSSLlbn. but internal estimates 
indicated that its current mar- 
ket value exceeded Cftbo. 

With CP’s own poison pm, 
eac h CP shareholder will be 
entitled to boy additional 
shares at a a per cent discount 
to market if an unwanted 
suitor buys 10 per cent or more 
of the CP equity. 

The plan would not require 
the votes erf Power Corporation 
of ffrnyufa, which, through a 
previous standstill agree ment , 
stiff fax effect can own up to 15 
per cent of CP’s shares. 


US broker launches 
East bloc risk cover 


James Hardie earnings rise 


By Bruce Jacques in Sydney 

JAMBS Hardie Industries, the 
diversified Australian building 
products group, has shown the 
benefits of a return to core 
businesses by hoisting earn- 
ings in the September half. 

The company has declared a 
one-fbr-eight bonus issue and 
higher dividend after lifting 
.manning profit 30 per cent to 
A$5k2rn ($42£m). The payout 
is up from 9 cents to 10 cents a 
share ■ 

The result was achieved 
despite a sales dip of almost 30 
per cent, reflecting the sepa- 
rate floating last year of the 
Spicers Paper group. Directors 
said sales excluding Spicer 
rose 14 per cent to $A644m in 


Huffington to 
sell gas field 
share for $lbn 

By John Murray Brown 

in Jakarta 

A J1BN STAKE in an 
Indonesian gas Arid is up for 
sale following the announce- 
ment last week that Mr Roy 
Huffington, the Texan million- 
aire, Is selling his privately- 
owned company, Hufico. 

The sale, being handled by , 
Goldman Sachs of New York, 
includes a 20 per cent stake in 
the Bontang gas production 
contract in East Kalimantan in 
partnership with Union Texas 
and Ultramar, of the UK. 

The production contract on 
the so-called Sanga-Sanga 
block which expires in 1998 Is 
expected to attract interest 
from oil majors and Japanese 
gas buyers. Indonesia ships 
around 20m tonnes of liquefied 
natural gas a year under 
long-term contracts with utili- 
ties and gas companies in 
Japan and South Korea. 


CREGEM 
FINANCE N.V. 

(Incorporated with Emited 
HafcaBly in the Netherlands) 

£15,000,000,000 

Floating Rate Notes due 
1992 (the “Notes”) 

UacnrafitiarniBy and 
irrevocably guaranteed by 

Credit Co mmunal 
de Belgique S. A./ 
Gemeentekrediet 
van Belgie N.V. 

(R st aHM ied in the Kingdom 
of Belgium) 

Notice is hereby riven feat for 
die interest period from 7th 
Deoembcr, 19® to 7th June, 
1990, the Notes will carry an 
Interest Rate of 5.95% 
pfr f 

Interest payable oa 7tli 
June, 1990 wOl amount to 
<296,685 per 
<10,000,000 Note. 

Agent Bank 

The Long-Term Credit Bank 
of Japan, limited 
Tokyo 


the half Bonus shares will 
rank for dividend after the 
in tei im payment, scheduled for 
February 9 1990. 

Hardie managing director, 
Mr David Marifarfanp said the 
latest result represented a 23.5 
per rent increase in earnings 
per share to 18.4 cents. 

.. "This is the fifth consecutive 
year in .which we have 
achieved a substantial 
improvement in operating 
profit for the first half of the 
year," he said. ‘This rise is the 
largest and reflects the benefits 
of restructuring our 
operations.” 

• Australian stock markets 
also continued to mark down 


shares in Band group compa- 
nies, with the flagship Bond. 
Corporation down 6 cents to 15 
cents amid reports that the 
Western Australian State Gov- 
ernment Insurance Corpora- 
tion may faunrfi wind up pro- 
ceedings against the mwipany 
today. Bond Media shares 
.slipped 3 cents to 12 cents, just 
2 cents above the 10 cents-a- 
share price implied in the pro- * 
posed offer for the group from 
Mr Kerry Packer. Bell 
Resources shares fell 2 cents to 
45 cents, with Friday looming 
as the next deadline for the 
Bond gro u p to formally begin 
its brewery sale to Lion 
Nathan of New Zealand. 


By Patrick Cockbum 

FRANK B HALL, the US 
insurance broker, has Intro- 
duced a $400m political risk 
insurance facility for Western 
companies investing in the 
Soviet Union and Eastern 
Europe. 

Mr Donald Bell, chairman 
and chief executive of Frank B 
Ball, says it is the first politi- 
cal risk insurance p r og ra mme 
designed for US direct invest- 
ments in a particular geo- 
graphical or political area. 

He said the programme, 
underwritten at Lloyd’s 
through the broker. Steel Btu w 
rfll Janes North America, is in 
response to the political 
changes going an in the area.— 
. There are now some 1,100 
Western com p a ni es, including 
100 from tha US, investing in 
the Soviet Union and Eastern 
Europe. The number of joint 
ventures with US partners 
grew from 16 to 97 in 1969. 

Cover far any single invest- 


ment is limited to flOOm. It 
mclmifts general political risks 
such as strikes and confisca- 
tion as wall as Western trade 
restrictions. 

Premiums are likely to be 1 
to L5 per cent of the assets at 
risk. . 

The Soviet Union has-been 
seeking with some success to 
attract Western joint venture 
p a rtn ers since 1986. This has 
created interest among West- 
ern companies but they are 
wary of the lack of a definite 
legal framework and fear a 
political backlash against fiber- 
ahsatitm. . 

A further problem is that 
^Soviet and East E uropean gov- 
emments often see joint ven- 
ture manufacturing plant as 
being orientated towards hard 
currency exports. 

- Western companies look tor 
access to fee local market and 
a proportion of profits in ban! 
currency.- 


Shearson Lehman coy over Perelman buy-in report 


By Janet Bush in New York 

SHEARSON Leh man H utton declined 
comment yesterday on a newspaper report 

rtiat Mr Rpnald I Whnan, irludinian of 

Bevkm Inc, was in discussions about mak- 
ing a substantial investment In the Wall 
Street securities house, 61 per cent owned 
by American Express. 

The New York Times reported yesterday 
that Mr Perelman was discussing pouring 
hundreds of milUons of ddDara into Shears 
son in exchange tor a large stake in the 
brokerage. 

The report quoted sources as saying 
that he would be ahle to obtain about 20 
per cent of the stock, or about 17.5m 
shares, if he exercised all his options and 
that be would have the right to buy the 


stock in two transactions from American 
Express. The New York Times report also 
said that Shearson was said to be examin- 
ing other deals, indteding a possible Infec- 
tion of capital by American Express in 
exchange for a sue of assets to the com- 
pany. 

There was some scepticism about the 
p o s sflrfllt y of Americ an Express negotia- 
ting with Mr Perehnan about him 
a substantial stake in Shearson. 

It has been known for some time that 
Ameri ca n Express has wanted to reduce 
its stake In the brokerage than 61 per 
cerate below 50 percent There have been 
persistent reports tint American Express 
has been unco mfo rtable with Its expos ure 


to Hnandal ma rket vicissitudes through 
its majority ownership of Shearson. 

Nevertheless, analysts who follow 
S hearso n Lehman expressed the view that 
a further split in the ownership of the 
brokerage may not be thought desirable. 
Apart from the majority stake held. by 
Ameri can Express. Nippon Life Insurance 
Company <rf Japan holds 13 per cent. 

Same that Mr Perehnan may 

not be an mmqiilvocally desirable new 
investor. When he attemp ted to boy a 
targe block of shares in Salomon Brothers 
in 1987, S a lom o n persuaded Mr Warren* 
Buffet, tiie. highly respected Omaha, - 
Nebraska I n vestor, to take a large, defen- 
sive stake to fend off Mr Perehnan. 


NOTICE OF REDEMPTION 


NEVI 


A/SNEVI 

DKK 600,000,000 Floating Rate Notes due 1993 

Tranche A of DKK 300,000,000 

NOTICE IS HEREBY GIVEN that, pursuant to Clause 6(c) of the 
Terms and Conditions of the Notes, the Issuer will redeem all 
of the outstanding Notes of Tranche A st their principal 
amount on 8th January, 1990 (the 'Tranche A Redemption 
Date”), when interest will cease to accrue on such Notes. 
Repayment of principal will be made upon presentation and 
surrender of the Notes at the offices of any of the Paying 
Agents mentioned hereunder. Accrued interest due on die 
Tranche A Redemption Date will be paid in the normal man- 
ner against presentation of Coupon number 13 on or after the 
Tran die A Redemption Date. 

Notes will become void unless presented for payment within 
twelve years from the Redemption Date. 

Principal Paying Agent 
KansalUs-Osake-Panldd 
ICansailis House 
80 ffisbopseate 
London EC2N 4AU 

Paying Agents ' 

Kan sal Us International Bank SA 
4, Rue du Fort Refnsheim 
2016 Luxembourg 

Sparekassen SDS Nordfinans-Bank Zurich 

8, Kongens Nytorv Bahnhofctrasse 1, 

Copenhagen 1Q50K, P.O. Box 8022 

Denmark Zurich Switzerland 

& KAN SALL1 S-OSAKE-PANKKJ 

tendon Branch 



December 7, 1989 

uiihANK, NAe* feed and paying ago# 


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FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


INTERNATIONAL COMPANIES AND FINANCE 


I '? 

•ty Two Swedish banks set 
% to announce merger 


By John Burton in Stockholm 

SWEDEN’S PKbanken »wrt 
Nordbanken yesterday 
requested that t rading or thnir 
shares on the Stockholm 
bourse be suspended, in antici- 
pation of an expected 
announcement today awf the 
two will merge. "\ 

• Officials atetate^ontroiHed - 
PKbanken, the co un try 's third 
larges t ■ - commercial : hwwv. . 
reused to comment onrepqrts 
that the h ank -hra m arip a 2dd 
valued at ' between SKr4bn 
($S28m) and SKrfibn for fifth - 
r anking Nordbanfcen, but- the 
boards of both banks- 'were 
meeting in extraordinary ses- 
sions last craning.- - 
•'The purchase ofNordbanken 
by PKbanken would be the lat- 
est in a series, of recent take- 
overs of regional banks by the 
country's top banks: 

. The acquisition of Nardban- 
ken, Sweden’s most profitable 
bank, would strengthen 


PKbanken, which is the least 


Total assets of the two would 
amount to SKrtBSbn. leaving 
the new hank in third position 
behind Sveoska Handelsban- 
ken. Svenska M«t Stir Sfanwka 
Banken just two weeks ago, 
and thereby stands to 
its total assets to around 
SKrSOObn. 

/. Nordbanken was farmed in 
.1986 as a result of a merger 
between two northern Swedish 
banks, Stmdsvallsbanken and 


ing, and the two insurance 
companies SkancGa tmd Trygg- 


Mr Rime Bamens, its presi- 
dent and a former PKbanken 
vice-president, has boosted 
profitability levels over the 
past two years by undertaking 
a wide-ranging cost-cutting 
programme and a tougher 
stance on credit losses. 

. Nordbanken’s biggest share- 
holders are the investment 
company Gustos, Oobab Trad- 


PKbanken, which is 67 per 
cent owned by the Swedish 
government, has suffered from 
sluggish earnings with a profit 
margin of 15-8 per cent during 
the first eight months of 1389, 

Most of the increase in profit 
during this period, which rose 
by 18 per cent to 5Kx£28bn. 
was due to the acquisition in 
June of the state-owned Inves- 
terings banken, which speci- 
alises in finnrww for wnaH con- 
cerns. 

That acquisition was part of 
FKbanken’s strategy to expand 
away from its traditional cus- 
tomer base of small savers and 
iwwrHwg to local governments 
and hninriwg - authorities. It also 
bought Sweden's largest bro- 
kerage house, Carnegie, last 
year to strengthen its securi- 
ties operations. 


GAN may buy UK insurer 


By George Graham in Paris 

GROUPS DBS Assurances 
Nationales (GAR), the French 
stats<ontro3ked insurance com- 
pany, is in discussions which 
canid lead to the acquisition of 
.General Portfolio, the UK 
insurer. 

GAN yesterday confirmed 
only that it was in advanced 
talks with General Portfolio. 

tt is understood, however, 
the deal is to be put to GAN’S 
board of directors next week, 
and the acquisition could put a 
value of around FFr2 bn 
/Bwwmi on- General Portfolio. 

GAN is the Btnaltogfc of the 
three French state-owned 


insurance groups, with net 
profits of FFrU95lra last year 
on total. premium income of 
FFilBLSbn, and has until now 
been less eager than some 
other French groups to plunge 
into large foreign 
Within France, it has taken 
control of Credit Industrie! et 
Commercial (dC). the state 
sector federation of regional 
hmbi, imd is writing to build 
synergies between the hanfr 
and insurance sectors. Abroad, 
GAN has tended to buy small 
companies or seek partner- 
ships with other large insurers, 
usually taking a minority 


stake. 

Mr Francois Hefibronner, 
GAN*s chairman, has in the 
past made it dear that he 
would not seek to acquire a 
c om pany as big as GAN. 

“Our idea is to be present on 
each major insurance market 
with a presence that is big 
enough to be profitable but not 
too tog to control. If we are 
talking with a big company , we 
prefer partnership to acquisi- 
tion - better that than pay too 
much for a control that you 
cannot exert, 1 * Ur Heflbronner 
said before news of talks with 
General Portfolio emerged. 


French detail chemicals change 


By WBHam Dawkins In Paris 

THE French Government, 
yesterday gave its first official 
confirmation of the outlines of 
the reorganisation of the state- 
owned (memical* industry. 

Atochem, tire chemicals off- 
shoot of the oil group Elf-Aqul- 
farfna. win take control of the 
plastics and fertiliser busi- 
nesses involved in the reshuf- 
fle, while s p ecia l ity che m icals 
wQl be moved to .the smaller 


oil group. Total, Mr Roger F&u- 
roux, the Industry Minister, 
told tire National Assembly. 

Earlier, he predicted the 
final details of the reorganisa- 
tion, designed to make the 
French state-owned chemicals 
industry more competitive, 
would he tied up by next week. 

“Each of the major chemi- 
cals companies in our country 
represents half of the activities 


of each of the major British or 
West German companies,” said 
Mr Fauroox. If we remain in 
this state, in five years they 
would instead represent a 
quarter and would be practi- 
cally pushed out of the sector,” 
he said. 

Among the main details stiQ 
to be settled are the prices to 
be paid for the companies 
being transferred, say officials. 


Trading in 
Charterhall 
shares is 
suspended 

By Ray Baafrford in 
London and Bruce Jacques 
In Sydney 

TRADING in the shares of 
Charterhall, the investment 
company beaded by Mr Russell 
Goward, was suspended yes- 
terday as the group’s Austra- 
lian parent held an emergency 
meeting with its banks. 

Westerns, which controls 60 
per of the Gbarterhall's 
capital, told the banks tt was 
considering a possible partial 
or total takeover, a “substan- 
tial" injection of new capital 
or the disposal of non-core 
assets as measures to relieve 
the pressure. 

The Australian parent’s 
shares have fallen 60 per emit 
during the past week, threat- 
ening to place it in breach of 
agreements with banks for 
loans of $A311m (DS$242m). 

The 35-year-old Mr Goward 
took control of Charterhall in 
1986 and after selling its oil 
interests established a down 
market shoe retailing and 
einthfng manufac turing busi- 
ness. 

He paid £27.2m (U5$42m) for 
Corah, the and. Spencer 

supplier wtrfiw year and 
last August bought Textured 
Jersey for £8. 7m. Charterhall 
is holding a £5m loss on its 
stake in A. Goldberg, the Glas- 
gow retailer, and has this and 
at least three other sharehold- 
ings in UK listed companies up 
for sale. 

Mr Goward requested sus- 
pension of trading in Westmex 
shares in Sydney yesterday 
after they had reached an 
all- tone low of 34 cents. 

However, Australian stock 
exchanges refused the suspen- 
sion request, and the shares 
subsequently recov e red to 38 
cents, down 2 carts on the day. 

Consolidation of Charterhall , 
has weakened the Westmex 
balance sheet, which carries 
more than 40 pm- cent at its 
stated |A582m worth of assets 
as intangibles. Inclusion of 
Charterhall also more than tri- 
pled the company’s debt to 
$A31Im, lifting p a ri n g from 
141 to 185 per cent 

The group’s largest remain- 
ing bankers are the National 
Australia Bank, Westpac 
Banking Corporation and the 
State Bank of New South 
Wales. 


Chips are down for Perkin-Elmer 

Alan Cane on fears for the future of the US semiconductor industry 


T here are growing fears 
in the US that Perkin- 
Elmer, a medium-sized 
instrument manufacturer, will 
be allowed to sell its semicon- 
ductor equipment division to a 
foreign, almost certainly Japa- 
nese, competitor. 

The sale highlights the pro- 
found disquiet over the future 
of the American semiconductor 
industry. 

The US Is already almost 
entirely dependent on overseas 
suppliers for the raw materials 
of the semiconductor industry; 
it virtually abandoned the 
memory chip business to the 
Japanese in the fierce chip 
price wars of the early 1980s. 

The concern is that if its 
decline in the semiconductor 
business is allowed to con- 
tinue, the entire US electronics 
industry - and, by implica- 
tion, industries such as defence 
which are heavy users of semi- 
conductors - will be at the 
mercy of foreign suppliers. 

The potential sale of the Per- 
kin-Elmer unit is also seen as a 
test case of the Bush Adminis- 
tration’s policy towards foreign 
acquisitions in the high tech- 
nology sector and as an impor- 
tant Indicator of the Govern- 
ment’s stance on US 
competitiveness. 

Dr Robert Noyce, president 
of the US semiconductor com- 
pany Sematech and co-inventor 
of the silicon chip said: "The 
time for action is now. The sale 
to a foreign competitor of a 
small American company that 
specialises in certain key mate- 
rials or equipment may not 
seem important, but how many 
such, firms do we have to lose 
befbre it becomes important?” 

Perkin-Elmer, best known as 
a manufacturer of high quality 
analytical instruments, is one 
of the few remaining US com- 
panies making machine tools 
used in the manufacture of 
microchips. 


A decade ago its projection 
printer, a marhine for imprint- 
ing electronic circuit patterns 
on to a wafer of silicon, was 
the workhorse of the industry. 
It was indisputedly the world 
leader in semiconductor pro- 
duction equipment. 

Today, the position is 
reversed. Three Japanese com- 
panies, Nikon, Tokyo Electron 
and Advantest leal the world 
rankings with revenues of 
8521m, $5 08m and 8385m 
respectively. They are ahead of 
the US companies Applied 
Materials and General Signal 
while Pe rkin-Elmer has foupn 


turn and Perkin-Elmer effec- 
tively lost out on a whole gen- 
eration of production equip- 
ment, allowing US and 
Japanese competitors to take 
away its lead. 

Four years ago, it designed 
and began to develop aq 
advanced new system “MicraS- 
can” in a.bid to take a leading 
position. 

Experts agree the system is 
exactly what the semiconduc- 
tor industry needs to manufac- 
ture 16 and 64 megabit memo- 
ries in the 1990s. As a measure 
of comparison, the most 
advanced computer systems 


SPENDING ON NEW PLANT AND EQUIPMENT 
BY SEMI-CONDUCTOR CHIP PRODUCERS* %m 

1980 1981 1962 1983 1984 198S 1988 1887 1988 

US 1.347 1.233 1.131 1.499 3.139 2.065 1.445 1.976 2,746 

Japan 632 834 921 1.768 3.771 3JS33 1,760 &343 4.485 

W. Europe 368 390 370 408 763 689 759 814 7B8 

* Don not InduH capthw producer* of —ml, i ■■junm davtcaa. 

Soar cm: P» a q uw f. Inc. 


to eighth place with revenue of 
only 5205m. 

Its decline raises important 
questions about the wisdom of 
short-term thinking in fast 
moving and investment-hun- 
gry industries like the semi- 
conductor business, and about 
government support for com- 
mercial companies operating in 
strategic business areas. 

Perkin-Elmer is no longer 
the world leader in semicon- 
ductor production equipment 
because it failed to invest 
heavily enough in keeping up 
with advances in technology. 

In 1964, it was at its peak 
through the success of the pro- 
jection printer, but its competi- 
tors were moving to wafer 
“steppers,” a more advanced 
photolithographic tool which 
made it possible to print more 
complex circuitry on the chip 
surface. 

The semiconductor industry 
was going through a periodic 
but particularly severe down- 


today are using four megabit 
memories. 

International Business 
Machines (IBM), the world's 
largest manufacturer of micro- 
chips, has a powerful interest 
in a healthy US semiconductor 
production equipment indus- 
try. and has contributed to the 
development of MicraScan and 
contracted to take a number of 
the marhinra 


A ccording to the US mar- 
keting consultancy 
VLSI Research, MicraS- 
can has a three to four year 
lead on all the competition, 
including the Japanese. The 
system will cost $4m each and 
a typical semiconductor plant 
will need 10 to 20. Today’s 
wafer steppers produce reve- 
nues of about $3,600 an hour; 
the MicraScan should produce 
$15,000 an hour. 

It is clear, therefore, why 
leading Japanese manufactur- 
ers Canon and Nikon should be 


interested in acquiring both 
the MicraScan technology and 
Peritin-Elmer’s semiconductor 
equipment marketing channels 
in the US. 

Perkin-Elmer decided to get 
out of the business when it 
seemed poised to capitalise on 
technological mastery, for a 
variety of reasons. 

F irst, it mokes scientific 
instruments such as 
atomic absorbtion spec- 
trophotometers, but never 
achieved success with subsid- 
iary activities. 

Second, it is unlikely to 
show an adequate return on its 
investment. The development 
of MicraScan has cost about 
$l00m and an additional $20m 
to S50m is needed to refine the 
product. 

Third, it is not convinced It 
has had or will receive ade- 
quate support from the US 
semiconductor industry. 

IBM has been active in sup- 
porting Perk in -Elmer's efforts 
to find a domestic bidder for 
the business but without 
apparent success. General Sig- 
nal, the leading US semicon- 
ductor equipment supplier and 
KLA Instruments are believed 
to have made bids but neither 
was acceptable to Perkln-El- 
xncr, according to reports. 

The Government position 
remains unclear. There is a cli- 
mate of opinion in the White 
House which rejects anything 
smacking of industrial policy 
or of picking winners and los- 
ers. 

It is an attitude which is 
anathema to the semiconduc- 
tor industry*. “If this vital 
industry is allowed to wither 
away, the nation will pay a 
price measured in millions of 
jobs across the entire elec- 
tronic field" Dr lan Ross, chair- 
man of the National Advisory 
Committee on Semiconductors 
has warned President Bush. 


Mixte sells Cassegrain I Air Canada in GPA plan 


By George Graham 

COMPAGNH3 de Navigation 
Mixte. the French conglomer- 
ate which is currently the tar- 
get of a FFr26bn ($437bn) take- 
over hid from the Paribas 
investment banking group, has 
sold its Cassegrain tinned veg- 
etables subsidiary to the Bon- 
dnelle foods group, for around 
FFrSaOm. 


By Robert Gtobens in Montreal 


Bonduelle has already 
expanded its activities in 
Europe, with positions in the 
West German, Belgian and 
Dutch vegetables markets. 

The Cassegrain activities 
have been among the weakest 
of Navigation Mote's empire. 
Sales fell last year by 1 per 
cent. 


AIR CANADA, the national 
airline privatised early this 
year, will sell part of its 15 per 
cent folly-diluted holding in 
Shannon-based GPA Group, 
the world's biggest aircraft 
lpasing company. 

Air Canada issued a state- 
ment following reports that It 
would announce the sale of all 


its shares in GPA, for around 
C$600m (DS$5i7m) on Decem- 
ber 14, Air Canada confirmed 
it would sell part of its hold- 
ing but would remain “a sub- 
stantial shareholder* in GPA. 

Air Canada would apply the 
proceeds to reduce its more 
than CSlbn debt and support 
its re-equipment programme. 


-r- — ,11' ' Wt- »«*•* • 'O 

'* sZ I .» - -!*• • u. ■■ 

Notice to the Bon dh o l de r s of 

THE BANK OF YOKOHAMA, UD. 

(KabushOdKaislm Yokohama Ginko) 

U^100,000,000 
2 Vs per cent Convertible Bonds doe 2001 
' (the “Bonds”) 

Notice Is. hereby . given that, as a. result of the 
proposed issuance .of 50,000,000 shares of common 
stock of the Bank m an issue price of 71,544 per share 
by way of public offering in Japan for payment on 15th 
! December, 1989 (Tbkyo time), and because of such issue 
price being less than the current market price per share 
(as defined in Clause 7(H) of the Dust Deed dated 30th 
September, 1986 constituting the Bonds) of 11,596 at 
4th December, 1989 (namely, the date of the Bank’s 
fixing the said issne price), an adjustment to the 
- conversion price few the Bonds will be required with 
effect from 16th December, 1989 (Ibkyo time) pursuant * 
to the said Clause 7(H). As soon as the total number of 
the shares of common stock of the Bank outstanding at 
15th December, 1989, based upon which new conver- 
sion price most be calculated, has been ascertained, a 
further notice w3L be published setting out the new 
conversion price as finally deter mined . 


7th December, 1989 


The Bank of Yokohama, Ltd. 
47, Honcho S-chome, 
Naka-ku, Yokohama, Japan 



BNP 



BANQUE RATIONALE DE PARIS 
US$100,000,000 
Floating Rate Notes due 1991 

In accordance with the terms and conditions 
of the Notes 'nbtica is hereby given that the 
Rate of Interest for the interest Period 5th 
December 198$ .to; 5th June 1990 has been 
fixed at 12.75% per annum. The interest 
payable oh: .the relevant interest Payment 
Date, 5th June 1990, will be US$644.58 per 
US$10,000 Note. 

: Sample Natlonaie de Paris p.l.c. 

Interest 


•;> Wardley Global Selection,*, ~j 
Scraete dHnvestissemeiit a Capital Variable 

7 rue du Marche-aux-Herbes 
L-1728 Luxembourg 


The shareholders are advised that on Thursday 
30 November 1989, a dividend of 

USD 0,042547 per share of the Australia Equity Fund 

USD 0/022187 per share of the Canada Equity Fund 

USD 0,106232 per share of the Hong Kong Equiity Fund 

USD 0,070345 per share of the UK Equity Fund 

USD 0,012921 per share of the USA Equity Fund 

GBP 0,177058 per share of the Sterling Bond Fund 

USD 0,071860 per share of the US Dollar Bond Fund 

USD 0,093673 per share of the International Managed Bond Fund 

GBP 0,20090 7 per share of the Sterling Reserve Fund 

USD 0,358039 per share of the US Dollar Reserve Fund 

has been paid to registered shareholders at the close of 
business November 24, 1989 and shares were traded ex- 
dividend after November 24, 1989. 


The dividend is payable to holders of bearer shares 
against presentation of coupon No 3 to: 

Banque Internationale k Luxembourg 
2 Boulevard Royal 
L-2953 Luxembourg 
Grand-Duchy of Luxembourg 

The Hong Kong and Shanghai Banking Corporation 

1 Queen's Road Central 

HONGKONG 

The British Bank of the Middle East 
London, Geneva Branch 
Rue du Rhone 23 
CH-1204 GENEVA 

The Hong Kong and Shanghai Banking Corporation (C.I.) 
limited 

P O Box 315, Hong Kong 
Brandi Building, Grenville Street 
St Helier, Jersey 

The Board of Directors 


NOTICE TO HOLDERS 

THE TAIYO KOBE BANK, LIMITED 

U.S3120,000,000 1% per cent 
Convertible Bonds Due 2002 

NOTICE IS HEREBY GIVEN, in accordance with Clause 7(BXiii) of the Trust Deed 
dated 28th September, 1987 entered into between The Taiyo Kobe Bank. Limited 
(the “Bank") and Bankers Trustee Company Limited as Trustee (the “Trustee") in 
connection with the issue of USS120.000.000 per cent Convertible Bonds Due 2002 
(the “Bonds") and Condition 12 of the Terms and Conditions of the Bonds that, by a merger 
agreement (the “Merger Agreement") dated 19th September, 1989 entered into between the 
Bank and The Mitsui Bank, Limited (“Mitsui"), the Bank will merge with Mitsui subject to 
approval at the meetings of the shareholders of the Bank and Mitsui to be held both on 
21 sr December, 1989 and further subject to completion of all procedures required to be taken 
under Japanese law. The Merger will become effective on 1st April, 1990 (the “Date of 
Merger"), mil be reported at the meeting of the shareholders of Mitsui the surviving 
company, scheduled to be held in late June, 1990 and is expected to be registered in early 
July, 1990 (the “Date of Registration**). With effect from the Date of Merger Mitsui shall 
change its name to The Mitsui Taiyo Kobe Bank, Limited. "Mitsui" shall also refer to 
The Mitsui Taiyo Kobe Bank, Limited, where appropriate. 

Pursuant to the Merger Agreement, Mitsui will be the surviving company and the Bank 
will be dissolved. Shareholders of the Bank will receive 0.8 share of common stock of Mitsui 
in return for one share of common stock of the Bank. Delivery of the certificates of shares of 
common stock of Mitsui will commence shortly after the Date of Registration. In addition, 
Mitsui will distribute to the shareholders of record of the Bank as of the Date of Merger a 
cash amount (payable shortly after the Date of Registration) equivalent to the amount of 
dividend which would have been paid by the Bank in respect of the period from 1st October, 
1989 up to 31st March, 1990. By virtue of the Commercial Code of Japan and the Merger 
Agreement, Mitsui will effectively assume the entire obligation of the Bank under 
the Bonds. 

The conversion price of the Bonds will be adjusted with effect from the Date of Merger 
from Yen 1.597.70 (the con version price as at the date of this notice) to Yen 1.997.10 per share, 
in the absence of any further adjustment hereafter up to that date. On or after the Date of 
Merger, holders of the Bonds will upon conversion receive shares of common stock ofMilsui 
(or, during the specified initial period, DRs referred to below) issued at such adjusted 
conversion price. Pursuant to Condition 5(D) of the Terms and Conditions of rhe Bonds, a 
supplemental trust deed dated the Date of Merger will be executed between Mitsui and the 
Trustee, which will contain the required provisions set forth in such Terms and Conditions 
of the Bonds. 

The conversion of the Bonds may be made without any interruption due to the 
contemplated merger; however, in accordance with the rules and practices of the Tokyo 
Stock Exchange, the shares of common stock of the Bank will be delisted on or about 
25th March, 1990 (the "Date of Delisting”) and, on or after the Date of Delisting to the 
Date of Registration, depository receipts ("DRs") (evidencing entitlement to the new shares 
of common stock of Mitsui issuable upon conversion at the adjusted conversion price) will 
be issued upon conversion as replacements for the delisted shares of common stock of the 
Bank. Such DRs shall be the only instruments available for trading within such period, 
except that between the Date of Delisting and the Date of Merger no trading of DRs will be 
made on the Ibkyo Stock Exchange. 

On and after the Date of Registration, the DRs previously delivered trill be replaced by 
the certificates of shares of common stock of Mitsui which such DRs have evidenced and, on 
and after such date, certificates of shares of common stock of Mitsui will be issued upon 
conversion of (he Bonds. 

The Taiyo Kobe Bank, Limited 

London Branch 

(As Principal Paying Agent) 

Dated: 7th December, 1989 


FT 

STATIONERY 

AT 

HALFPRICE 

FT Stationery packs for yoor 
personal organiser. £240* each. 

Fbr full information - and a 

FREE copy of the sew FT Collection 

catalogue - ring rv~]| 

01-799 2002 1® 

bpriuMM *T 1 “ 'i *| 


US$ 1 25 , 000,000 “ ^ 

First Chicago Corporation 

Floating Rate Subordinated Capital Notes Dtia December 1996 
Notice a hereby given that the Rate of Interest has been fixed at 
8.625% and that the interest payable on the relevant Interest 
Payment Date, March 6 , 1 990 against Coupon No. 13 in respect of 
U S$1 00,000 nominal o f the Notes will be US$2,1 56^25. 

December 6> 1989, London _ 

by. Citibank NA (CSS1 Dept), Agent Bank CTTIBANKCk 


market 

«.* at 

remawf- 

I'cpn'dU! 

rewfliii 

VAth cf 

aajT 

c* stir- 

c-jua- 
d - *.! 

»■ f«e ,e 





Saatchi’s trend-bucking comes to an end 

Alice Rawsthorn reports on reactions to the advertising agency’s end-of-year results 

A young account director scooped more prizes than any able to sail through the Sndna- strengths^ b^n ita paternal- There is no 

at Saatchi & Saatchi’s otheragency at the advertising try’s slumps. jsm. I osedto be able to look group s problems have affe 

London advertising award ebonies. . . “We have had years of buck- people >m the inttUeU client “nfitawe. So 


A young account director 
at Saatchi & Saatchi’s 
London advertising 
agency sums up his feelings: 
"All we have ever known is 
success. For as long as I have 
worked here we have been the 
biggest and best agency in 
town. Suddenly the group is in 
trouble and no one can really 
believe it is happening.” 

At one o’clock yesterday 
afternoon all Saatchi’s employ- 
ees found ont exactly how 
much trouble their parent com- 
pany is in, when Saatchi & 
Saatchi’s end-of-year results 
were published in London. 

Saatchi, once one of the stars 
of the stock market, 
announced an overall loss - 
after tax, exceptional and 
extraordinary items' - of 
£58 .5m for the year to Septem- 
ber 30 against profits of £75.1m 
last year, hi recent months its 
shares have waxed and waned 
on rumours of everything from 
hostile bids to senior staff res- 
ignations. 

While the group’s fortunes 
have fluctuated on the stock 
market, the original Saatchi 
agency on Charlotte Street in 
London has seemed to go from 
strength to strength. Week 
after week it has topped the 
new business table in Cam- 
paign magazine, and it has 


scooped more prizes than any 
other agency at the advertising 
award ceremonies. 

The London agency, founded 
19 years ago fay Charles and 
Maurice Saatchi, who are 
brothers, is the jew el in the 
company’s corporate crown. It 
bag dominated London adver- 
tising for years is still one 
of the most profitable parts of 
the Saatchi empire. 

But behind the facade of new 
accounts and award a c co lades, 
the troubles of the Saatchi 
group are faifcfag a toll on the 
agency. 

"Morale is low,” said one 
executive. "AIL we have heard 
for months is ‘Cut the cost 
base.’ There are rumours of 
redundancies. Everyone is 
frightened.” 

Most of the London advertis- 
ing agencies have had a diffi- 
cult year. 

The slowdown in consumer 
spending and pre s su re on cor- 
porate profits has forced many 
advertisers to reduce budgets 
or cancel campaigns. Some 
agencies have been forced to 
shed staff this autumn. D’Arcy 
Mfldns Benton & Bowles, one 
of the larger companies, 
recently announced almost 30 
redundancies. 

The difference for Saatchi is 
that, in the past, it has been 


able to through the indus- 
try’s slumps. 

“We have had years of buck- 
ing trends,” said a long-serving 
employee. “We are used to 
reading about redundancies at 
other agencies and saying: 
‘Hey, we are still taking people 
on.* We are not very good at 
standing in the mire with 
everyone else." 

ft ]s difficult for employees 
to gauge exactly how many 
jobs have been lost at the 

‘We are not 
very good at 
standing in 
the mire with 
everyone else’ 

agency, which is structured in 
a decentralised system of 
account groups. The consensus 
is that mere have been about 
SO redundancies this year. 

“As the end of the financial 

year approached, there was 
more and more pressure to cut 
costs and squeeze as much 
profit as we could out of the 
agency,” said one senior execu- 
tive. “One of Saatchi’s 


strengths has been its paternal- 
ism. I used to be able to look 
people in the eye and say that 
we were the best employer 
around. The saddest thing js 
that I cannot say that any 
more." 

The agency has also post- 
poned its customary October 
salary increases until January. 
hi the past it has reviewed sal- 
aries on a quarterly basis, with 
Tnntn increases awarded in 
October, after the end of the 
financial year. 

This year a memo arrived in 
mid-October saying that, in 
future, there would be one 
increase in January, “ft was all 
dressed up as an efficiency 
measure,” said one executive. 
"And they did sugar the pffi by 
giving ns our Christmas 
bonuses. But we all knew it 
was a way of squeezing costs. 
E veryo ne was furious.” 

The disillusion intensified 
when Saatchi appointed Mr 
Robert Louis-Dreyfos as chief 
executive in October. “Mb6t of 
ns found out about it when we 
read the newspapers the next 
day,” said one employee. 

The critical question for the 
Saatchi group is how much the 
uncertainty over its flztare - 
and the cost cutting — is 
affecting the agency’s perfor- 
mance. 


There is no sign that the 
group's problems have affected 
client confidence. So far 
Sagfeh? has not lost any major 
accounts and it has continued 
to win new business. But the 
success of an advertising 
agency - like that of any 
other people business — hinges 
on the confidence and commit- 
ment of its workforce. 

One of Saatchi’s greatest 
strengths has been its culture 
of success. 

"From the very beginning 
Saatchi was built on an abso- 
lute conviction that we were 
the best agency around,' 1 was 
how one employee put ft. 

“I joined this agency because 
it was the best, and everyone 
in file industry knew it,” said 
another. 

Some Saatchi executives are 
now concerned about morale. 
"Every year the agency has 
been set absurdly high profit 
targets,” said one. "The differ- 
ence is that in the past people 
have knuckled down and done 
everything they could to meet 
them. Now people are saying 
‘Forget this. What do they [the 
holding company] ever do for 
us?" 

Mr Roy Warman, chief exec- 
utive officer of Saatchi’s com- 
munications division, said: 
"We do recognise that the kind 


Shara price [pence) 
430 

m 

280 =- 

260 — i — ; 

240 1— * — I — I — 1 — t— 1 — 1 — 1 — 1 
JM 1889 


• “ ra2 samse- 1 

Mtfm to aw £620400 

m March 21 

AGMofM kiprodn 

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pros* and Me at 
eoneftapetaa announced 


of press comment the group 
has attracted does not make 
life easy for our operators. But 
despite the group’s problems, 
the operations are still going 
from strength to strength.” 

Saatchi has staged several 
morale-raising exercises in 
recent weeks. There was a 
huge Christmas party for 
which Alexandra Palace in 
North London was con v erted 
into a stage set resembling 
employee, ft was acco mp an i ed 
by a memo. “We consider this 


Managanm dMMH 
94*0*0 

SMo Barfuacori leveata 

Robert Lnuta-Oieyfu* 
eppoModchtate aa cultaa 


Charlotte Street 
Last month. Marketing Week 
Tiw wswine published a poll of 
leading advertisers in which 
was voted the best 
all-round agency. The agency 

sent a copy of the article and a 
bottle of Lanson champagne ~ 


a Saatchi account - to every 
to be the ultimata accolade at a 
time when the group is 'feeing 
considerable di ffi cul t y," it 
read. 

Yesterday the full extant of 
its difficulties were revealed in 
Saatchi’s results. 


UK ECONOMIC INDICATORS 

ECONOMIC ACTIVITY- tadlcea of Industrial 

fT885" 100): engi nee rin g o ntere {£ billion); rtlall »al*»wlum* (WB«WOBw 
saiga value) unemployment (excluding school bmn) end 

unfitted vacancies ( 000 a). All seasonally adjusted. _ . . 

ML Wi EM. Retail Retail (Xml). . . 

prod. <x 3 u* •* Vtaue* pfoyad - Itata. ■ . 




32.0 THJ 

Ml 7 1*0.1 

MS 1214 

3U 1X13 


Mt qtr. 
2ad«r. 

3rd qtr. 

JUuuy 

February 


In 1962 Sharp were the first 

to tell you how to 
use a microwave oven. 


MU 1114 

was rtiM 

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end luelefc engineering otdpat. metal iMnutacM4 laottee. leader end ofemng (tBW-WI. 

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gooda. goods output note 


It’s now 27 years since we introduced 


the first domestic microwave oven. 


In that time, it has become an 


a turntable, it’s important to turn or 
rotate the food now and then to ensure 
even cooking. (Which is why all Sharp 


look at the food. If you are in any 
doubt about it being thoroughly 
cooked, the experts advise you to cook 



essential feature of millions of 


kitchens throughout Britain. 


T h ey still are. 


or reheat the food to '70°C to” 


kill off any bacteria which may 


But today, the microwave is fac- 
ing a serious accusation: that it cannot 
kill poisonous organisms like listeria 
which are present in some foods. 

And of course, if a microwave is 
not used correctly, it can’t. 

Microwaves aren’t magic. They 
are machines, totally dependant on the 
people who operate them. 

If the person gets it wrong, the 


microwave gets it wrong. 


So as the UK’s best-selling 
microwave manufacturer, we’d like to 
offer some rules for getting it right. 

For instance, don’t forget to allow 
‘standing time’. This is actually an 
important part of the cooking process, 
as it allows heat to be spread evenly 
without overcooking. 

Where possible, try to sdr or mix 
up the food during cooking. Again, this 
helps to distribute heat more evenly. 

If your microwave does not have 


microwaves have turntables). 

If it is supplied with racks, use 
them. This applies especially to combi- 
nation/convection ovens,- but with 


these models, remember to use the 


low rack even when on microwave 


only. Use of the low rack allows the 
food to be cooked more efficiently. 
Which is why all Sharp convection’ 
microwaves are supplied with one. 

The shape of the dish or pot is 
important, too. Round dishes let 
microwave energy spread through the 
food more evenly. 

Be especially careful with pre- 
cooked chilled foods. Stick to reputable 
brands. Avoid anything that doesn’t 
give full cooking instructions. And 
never, ever, try to reheat leftover pre- 
cooked dulled food or previously frozen 
Toods that have been reheated once. 

But above all, use your head. 

At the end of cooking, take a good 


be present. 

Recent government tests have 
indicated that two Sharp microwave 
ovens did not reach 70°C. However, 


these models - the R7A50 and R8H50 - 


did achieve the required temperature 
when used correctly with the low rack 


as described above. This has been 


confirmed by the government test lab- 
oratory conducting the investigation. 


But the basic rule is if the food 


still isn’t piping hot right through, cook 
it until it is. Just as you would with a 


conventional cooker. 


Which just about sums up what 
we have always believed. 

That a microwave oven is every 
bit as safe as a conventional cooker as 
long as it’s treated properly. 

With common sense. 


DacenAer 
19M . 

IMA 

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+253 

067 

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aid qtr. 

tlx* 

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•6070 

-4400 

+394 

060 

4347 


3rd qtr. 

1144 

1462 

-6717 

-0417 

+301 

062 

4240 

r 

January 

TI7.1 

1461 

-60*7 

-1440 

+11S 

068 

81.71 

— 

February 

106.1 

1360 

-6224 

-1423 

-0 

904 

3140 


March 

1164 

1362 

>4,703 

-1402 

+141 

067 

8040 

- 

April 

1104 

1404 

-2.103 

-14H - 

+110 

004 

4740 

E 

May 

1164 

1364 

-1,720 

-1/403 

+S7 

904 

4601 

P 

Juris 

117J 

142.1 

-14" 

-1420 

+122 

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4347 A 

h 

JWy 

1161 

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+70 

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August 

1168 

1467 

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+143 

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. 

flaplsiwbnr 

1360 

1463 

-1410 

-141* - - 

+S2 

060 

4243 

' 

October 

1S64 

1424 

-1444 

-1444 

+ 102 

963 

394* 

* 

November 







3677 

* 

i 




OCX 



SEE 

STS* 

. 




CANDID 89 

Creative arts dr new developments in design 

7-10“Dec 

Buy and commission direct from the artfetf 

See some of the very Best in 


FURNITURE 
CERAMICS 
TEXTILE 
PRODUCT DESIGN 
GLASS 
BJ-USTRAHON 


*E PHOTOGRAPHY 
2S FILM 
LE JEWELLERY 
5N FASHION 
3S SCULPTURE 
>N PAINTING 

at the 


For more information wrim « Cwinmer Information Centre, Sharp Ekcuunia (UK) Lid. Sharp House, Thorp Road. Newton Heath. Manchester M10 9 BE or phone 061-205 2634 (4 lines open during office haura.) 


Business De sign C entre, Islington, Lontton. EngM 

OrgHtod by tb* National DnigiiJadex T«i 01-278 9318 F» BJ-2M 9SB : 






23 


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,'V 1 ' 


FINANCtAL TIMES THURSDAY DECEMBER 7 1989 



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INTERNATIONAL capital markets 


INTERNATIONAL 
APPOINTMENTS 

Perrier 
appoints 
international 
marketing 
director 

SOURCE PERRIER, of France, 
tbe world’s largest producer of 
mineral water, is to switch Mr 
Peter Thomas to a newly cre- 
ated post of Intontfniff l mar * 
ketfng director in Febniaxy. 

Hr Thomas, 35, has been 
director of m arketing at ft* 
Perrier (UK) Ltd arm since 

1986. He joined. Perrier in 1385 
as marketing manager after 
previous service at PepsiCo. 

. The mineral water market 
has experienced considerable 
growth during Ms four years 
with Perrier (UK), and turn- 
over at this subsidiary 1 «m 
Jumped from £7.5m to over 
£50m in this period. 

In Ms new role, Mr Thomas 
will focus in the short tom cm 
strategic lasses fac in g the Far- 
rier {sands in important coun- 
tries across Europe and the 
Par East, phis strength ei ' 

the group's internatlc 

promotional and sponsorship 
activities. A successor is t o be 
appointed for Perrier (UK). 

- Source Perrier said that 
1988 has been a boom year far 
Perrier (UK) and for Perrier 
worl dw ide, and that the new 
appointment reflects the 
group’s confidence in the enor- 
mous potential and dynamism 
of the bottled water market. 

Moore Corp 
chairman 
to retire ; 

By Robert Gibbons " 

in Montreal 

MR JUDSON Sinclair - Is 
r et i ring as ehahnum of Moore 
Corporation, the Toronto- 
based leading International 
bus ine ss forms mannfarlnra. 

He has served 42 years with 
the company and will become 
an honorary director. 

Mr Keith Goodrich, already 
president and diirf executive, 
wfll also assume Mr Sinclair's 
position. Mr Joseph McArthur, 
chief, finanrial officer, b«« 
been- named in addition a 
director and vice chairman. 

The changes are effective 
from the start of file new year. 

LAC Minerals 
chief becomes 
BIG chairman 

THE New York-quoted Bond 
International Gold said that 
Mr Peter Allen, president and 
chief executive of LAC Miner' 
als, the Toronto-based gold 
mining parent, has been | 
appointed chairman of BIG tol- . 
lowing the resignation of Mr 
Alan Tffond , the embattled Aus- 1 
traUan entrepreneur ■■ who 
recently sold Ms 65 per cent 
stake in BIG to LACL 
Besides MrBond, six direc- 
tors resigned and ' were 
replaced by Mr Allen and four 
other new directors elected to , 
file board. Three of the previ- 
ous directors will remain, and 
BIG’s board will be reduced 
from 10 members to eight 
- * ★ ★ • 

BURNS FRY, one of Canada’s 

leading full service investment 
dealers, named Mr John Mae- 
Nanghton company president 
nnd-e h atmum of the executive 
committee. Mr Latham Burns 
and Mr DJL Johnson, were 
made vice chairmen. 

Tbe company is 30 par cent 
owned by Security Pacific, the 
California-based banking 
group, which could boost its 
stake to about 50 per -cent 
within a year or so. 

Mr MacNaughton ha d been 
president cHirf executive 
of two Security Pacifi c' units . 
Mr Bums had been chairman 
of Burns Pry’s executive com- 
mittee and Mr Johnson had 
been the co mpany ’s president. 

Borns Fly is increasing its 
executive committee to 18 
from 14 and raising the num- 
ber of representatives of Secu- 
rity Pacific to four from three. 

* * ★ 

EMERSON Electric, the big US 
electricals group, named Mr 
Albert Suter, formerly an exec- 
utive vice president, to serve 
as president, chief operating 
officer and a tfirecior. 

Mr Suter, 54, succeeds Mr 
James Hardymon, 55, who 
resigned after 28 years with 
Emerson to “pursue other 
o pportu nities.” 

• Textron, the US conglomer- 
ate, soon announced that Mr; 
Hardymon has been appointed 
as Us president antT to a new 
post for the company of chief I 
operating officer, effective 
from January 1. 

As president, Mr ffardynum 
succeeds Mr KF. Dolan, who ; 
will remain chairman . and 
ddef executive. Mr Hardymon 
win be on the Textron hoard. 

MR WILHELM.. Borgmann, 
ex e c uti ve board vice chairman 
at West Germany’s Continen- 
tal, the world’s fimrth largest 
tire group, has taken over as 
president and, chief executive 
ofBiyr at General Tire, Conti- 
nental's US'unit based in Ohio. 

: He succeeds Hr Gilbert Neal, 
who took early rofironuni. 


Philippines investors fear 
huge drop in share prices 


By Deborah Hargreaves 

AMID unrest in the 
investors are ner- 
’ awaiting the opening of 
tbe MnnUn Strvfr Exchange tO 
see whether share . prices 
pihmg i*. The exchange has been 
rinsed since last Thursday, as 
rebels control part of the cen- 
tral business district of ' the 
dty. 

Some fond managers expect 
share prices to tumble by more 
than 30 per cent when the 
opens. In the mean- 
time, the country funds that 
were set up just months ago to 


Philippines 


Man8a SE Composite Index 

1400; 


track tiie performance 
Manila ex chang e are suffering 
from the same Investor con- 
cern. 

Three country funds have 
been set up this year as inves- 
tors hoped that the stable polit- 
ical situati on in Manila would 
catalyse strong economic 
vth. And with ironic thn- 
Nomura launched its First 
Philippine fond a month ago in 
a blaze of publicity abont the 
country’s long-term potential 
for overseas investees. 

Country funds give foreign 
investors aranm? to a TiftrfrFf 
that may be difficult for them 
to penetrate alone. The Philip- 
pines has various restrictions 
on the stocks foreigners can 
buy — fir example , they can- 
not buy bmiUliig *gfriHM*lrc — mu 1 
it mu be rfr Wl miTt for them to 
get to grips with the Philip- 
pines 

Similarly Banque Indosnez, 

the hawWwp arm of France’s 

Groupe Suez, launched a 550m 
Mufla fond in September, 
Jardine Fleming Investment 

Managemen t lannehed its JF 



1000 


1989 


Philippines fund. 

Both the Manila fond and 
the JF Philippines fond, which 
are listed on the London Stock 
Exchange, are trading at dis- 
counts to their offer price, 
although Nomura’s fond con- 
tones to be at a premium. It is 
not unusual for country foods 
to trade at wildly volatile pre- 
miums and discounts, but if 
investors lose confidence in the 
Philippines Government, the 
value of shares in the funds 
could plummet 

Shares in the Manila fond 
were trading at an average 
mice of S10.75 at the end of 
November after a lamv-h price 
of fio.40, but dropped to a $7.50 
bid and 59.50 offer on news of 
the coup attempt a week ago, 
and are currently trading at 
around S&50 to $9.00. 

The fond Is 51 per cent 
invested with $26m of its 
reserves still held in cash, 
according to Mr Ray Jovanov- 


ich who manages the fund 
from Banque Indosuez’s Hong 
Kong offi ce. 

However, even if the country 
weathers the crisis and returns 
to stable growth, a Philippines 
fond would only represent a 
small part of any instit u tional 
investor’s portfolio, given that 

the entire market has a capital- 
isation of some $8bn to $10bn 
compared with around $7D0bn 
in the UK. 

“Institutions have to be 
aware that these are high risk, 
high re ward markets,” says Mr 
Charles tjTHn , executive direc- 
tor at Merrill Lynch, who mar- 
kets many country funds. Hie 
says he would not advise put- 
ting a large proportion of a 
portfolio’s or individual's 
money into one country fond. 

Country funds have proved 
popular this year, particularly 
among Japanese investors 
looking to participate in the 
often huge growth of emerging 
stock markets worldwide. 

Mr Charles Fowler at John 
Govett points out that country 
fonds <»hnniri form part of a 
diversified portfolio, to balance 
political and geographical risk. 
John Govett wwnag wa a Malay- 
sian omorg ln g wrnipantwi fond 
that was launched by Hoare 
Govett this week. 

The company has seen the 
Singapore fond it also manages 
rise to 14 per cent preminm on 
net asset value ftom its launch 
this year. 

John Govett is to a 

550m to 5100m Hungary fond 
at beginning of wwt year 
as investors turn their atten- 
tion to eastern Europe. 


Futures trading starts on Copenhagen KFX index 


TRADING in futures based on 
a new stock index will begin 
on the Copenhagen Stock 
Exchange today, writes Hilary 
ernes from Copenhagen. 
Initially trading will take 
place hx three and six month 


futures, but later nine month 
futures and European call and 
put options w ill be introduced. 

The Iwrfa* , KFX, is based on 
tiie 25 most liquid stocks with 
tbe largest market value. The 
index la calculated and 


announced at five minute 
intervals through the *narfcH t , ‘« 
electronic trading and informa- 
tion system. 

The futures will be traded in 
multiples of DKrtOO.OOO at face 
value. 


FT INTERNATIONAL BOND SERVICE 


Listed an the latest International bonds for which there Is an adequate secondary market. 

US DOLLAK 
STRAIGHTS 
Alberta S%96~ 

Alberta 9%' 


Closing prices an December 6 


Austria 9% 93 

B.FJXE. 8% 94™. 

B.F.C.E.9%95 

Brit.Tel.nsL 9% 

Canada 9% 

CX.CE9% 95. ™ 

C2L09%93. — ; 

Grant National 8% 93 

CrwMNatIoail7%92 — 
Credit National 9% 93 
DaHchl Ku9% 92.. 

- Denmark 8% 94... 

E.E.C.79L:. 

E.E.C. 1090. 

E.LB.8%99.. 


EurofbnaZ0% 90. 


EkcJDe Fiance 998.™.. 
Elec. De France 9% 99.. 
Finland 9 96- 


FhaLEap.QI.Ble 92 

Finn. Exp. CcL 9% 95 

Ford Motor CraHtB91 

Gen.Elec.Cap.CDni.993 

Cen.E3ac.Cap.QvnO 17291..™ 

G.M-A.C. 99b 

Gen.HtK.Corp.9i* 92 

IBM Credit Carp. 8% 92 

IBM Credit Qxp. 83)91 

IBM Credit Carjt992 

IBM Credit Corp. 9% 92 

Italy 8%; r ‘ 


Offer day week YltM 
750 lOOh 101 04<J% 8.45 

600 104% 104% 0 40 >« 8.40 

140 103% 103% -SO 1 * 40% 833 
175 99% 100% 040% 836 

ISO 103% 1031s 40% 40% 8.45 
250 104 104% — 0% 40% BJA 

1000 103% 104% 40% 40% 8.17 
300 103% 109% 040% 8.41 

150 102% 10340% 40% 8.49 
200 -99% 100% 040% 8^7 

100 97% 90% 04 0% 8.24 

1604102% 103 0 40% 8.43 

150 102V 103 0 40% 850 

130 199 99% 040% 8.43 

XOO ‘97% 98 040% 8^7 

140tl04% 104% 040% 831 

150 99% 100% 040% 832 

1001104% 105 0 40% 838 

200 102% 103% 40% 40% 8A5 
200 105% 105% 040% 838 

250 102% 102% 40% -0% 8.44 


TEH STRAIGHTS 

Canada 6% 91 

Canada 5% 93. — 
Euroflma 5 1995.- 
E.I.B. 4% 93.. 


Ireland 5% 93. 

Norway 5% 95 

Sweden 4% 93 

World Bank 5% 96. 

m u |* M L 7 fXM 

■voru iWIt M W. 


famed 

— 80 
— 80 
20 

— 30 

.... 30 

— 50 

.... 50 

10 

..... 20 


BM Offer day we* Yield 
99% 100% 0 0 6.09 

98% 9940% 0 5.97 

95% 95% 040% 5.97 


96% 96% 
96% 96% 
96% 97% 
95% 95% 
94% 95% 


0 O 6.09 
0 0 6.25 

040% 5.79 
0 0 632 

040% 5.90 


103% 104% 40% 40% 5.92 
Amage price ctaage™ On day 40nn WKk.40 


flTHEX-STRAKKTS - 
Abbey Nat. 10% 94 CS.. 
Abbey Nat. 11% 93 £._ 
Aegon 7% 92 FL™. 


Italy 

Italy 


9% 95. 
9%99_ 


200 100% 100% 
200 103% 104 
250 199 99% 

500 1102102% 
300 102% 102% 
300 100% 101% 
200 101% 102 
400 100% 100% 
250 100% 101% 
250 tl01% 102% 
250 101% 102% 
1500 100% 100% 


40% 8.28 
0 0 833 

0 0 837 

040% 831 
O 0 a40 
040% 8.78 
0 40% 837 
0 40% 836 
040% 834 
040% 824 
040% 837 
0 40% 833 


Rob C. W/W 4% 94. 

Japan Dev. Bank 10 96 

KFW Inti. Fin. 994 

LT.CJ3.of Japan 9% 92 

Nippon TeJ.dtTel. 9% 98 

Norway 8% 93 

Portugal 8% 93 

Samtama Carp. W/W 4 93.™. 

Sweden 8% 96. 

Sweden 8% 92. 

Toyota 9% 91. 


Toyota Mtr.Corp- W/W 4 93™ 

Victorian HepU% 92. 

World Bank 8% 99 

World Bank997 

World Bank 9 93 

WorM Bank 9% 98 

World Bank 9% 99™ 


World Bank 9% 96 

Average price change. 

DEUTSCHE BARK 
STWUorre 

Asian De*. BK. 694 

Austria b% 99. 


Bk.FrpaJEam.U5Sff796 

Bank of Tokyo 5% 93.. 


Qxmnerzbanka/s.5% 93 

Credit Fancier 6% 99 

EJ.B.6% 99 

EJ.B.6%99 I 

E.I.B.6% 96 

E.I.B.6% 95 


Ewo.Corrt* Steel 5% 97..™. 
EUmfina6% 96.. 


Elec De Franec5% 97._ 
Hydro-Quebec 6% 99™. 
Japan Dev. Bk. 5% 95.. 
■ Finance 5% 97™ 
uO.B.7%99... 


Intand6% 97 

(inland 7% 99.- 

Malaysia 6% 94. 

Nat. Wet BK.PLC69B 

N.H.L. Finance 6% <B 

Nippon Tel^-iTel. 695. 

Oesters. Kombk. 593. 

Portugal 5% 92. 

Portugal 6% 95., 


PrtratiMiiken5% 93- 
Royal Insurance 5% 92.. 


Turkey 6% 93. 

Uatoa BkJTnfand5%94 

World Bank 698... 

World BK. 6% 97 

World Bank 6% 99 

Avenge price rhangr... 


1000 104% 104% 40% 40% 830 
1000 106% 106% 40% 40% 839 
1000 110%111%M%40% 2.01 
200 107% 107% 0 40% 8.42 

300 102102% 0 40% 839 

200 101% 102% 040% 833 

MO 104% 104% 0 40% 831 

500 101% 101% 0 40% 8.14 

300 199 99% 40% 0 083 

1500 123% 124% -0% -0% -2.29 
200 101% 102% 0 40% 831 

200 199% 100% 0 40% 832 

200 101% 102% 040% B38 

1500 106% 107% 40% D 1-84 
ISO 105% 106% 0 40% 8.69 

1500 101% 101% 0*0% 839 

300 102% 103% 040% 8.42 

300 102% 102% 40% 40% 838 
300 104% 104% O 0 831 
500 106% 10740% 40% 831 
300 106% 106% 040% 8.43 

.. On day 40 on wedc40% 


200 91% 
750 194% 
750 193% 
100 93% 
300 93% 
500 93% 

600 90% 
300 194% 
600 95% 
300 97% 
173 89% 
100 92% 
300 90% 
300 192% 
300 190% 
100 88 % 
300 97 

300 90% 
500 96 

150 93% 
300 188 % 
200 .188% 
400 193% 
300 91% 
150 94% 

150 94% 

ISO 91% 
300 94% 
500 191% 
200 190% 
500 189 

600 91% 
600 93% 
On (Uj 40 e 


Ofler ebg week Yield 
92% -0% 40% 8.02 
94% 40% 40% 7.62 
94% 0 40% 8.22 

94 0 40% B.01 

93% 0 40% 7.77 

93% -0% 40% B.77 
91% 40% 40% 7.65 
94% 0-0% 733 

96% 40% 40% 7.43 
98% 40% 40% 7.33 
90% 40% O -- 


92% 40% 40% 


7.76 

7.74 

732 


91% 40% 40 - 
93% 0-0% 7U1 

90% 40% -0% 7.54 
89 0-0% 7.B5 

97% 0-0% 7M 

91% -0% -0% 8.13 
96% 040% 7JU 

93% 0-0% 7.99 

88% 40% 0 7.94 

88% -0% -3 8.82 

94% 0 41 6_50 

92% 40% -0% 7.91 
95 0 40% 800 

93% 0-0% 7.77 

92% .0-0% 8JL1 
94% 040% 805 

92% 0 40% 8J8 

91% 40% 0 809 

89% 40% 0 7.73 

41% 040% 8.52 

94% 040% 7JU 

e week 40% 


Alg. Bk. Ned. 5% 93 FI 

Austria 7% 94 ECU 

Band ays Ant. 13% 91 AS_™-.. 

BeWam8%94Ejai 

Beil Canada 10% 04 CS. 

BP Capital 9% 93 £, 

British Airways 10 98 £ 

BriL Telecam 9% 99 £. 

Comro.Bk.AiDt 12% 93AS..™ 
COmm.BtAu*03%94N2S.... 

Credit Foncfe-996Eai™ 

CrlocalFrance 9% 92£cn.™_. 

Dent Bk-Aos. 13% 93 AS 

Deutsche Bk_Fta. 15 94 AS. 

Elec. De France 9% 99CS. 

E.LB. 796 LFr 

E.I.B. 7% 99 n 

E.I3. 9 99 Ecn. 

Eurnflma7%-946e«. 

Export Ov.Crp.8% 92Eca 

Fcd.Bw.Ov.Bk. 994 Ecu. 

Fed.Bns. Dv. Bit 9% 92C5.™... 

Fem.Stato7%93Ers.-_ 

Fold Cr. Can. 10 k 93 CS. 

Ford Cred.Can.10% 96CS. 

Ford Cred.FimdOO% 93£_. 

G.MA.C. Canada U3/494CS_ 

Hetaeken 7% 94 FI 

Hydro-Quebec 11 99 CS-- 

Uoydt Bank 10% 98 £ 

Uoytfe Bank 11% 98£. 

Montreal TstOOk 93 CS. 

Nat. Aw. Bk. 14% 94AS. 

New Zealand 9% 93 £ 

O.E.K.B. 10% 99 CS 

Royal Bk-ScotOO% 98 £. 

Saskatchewan 10% 93 CS 

State Bk.NSW. 13% 93AS- 

Sweden 7% 93 Ecu 

Sweden 15 94 as 

Toronto-Own. U % 91 CS. — 

Toyota Mlr.CrOO% 94CS 

Toyota Mtr.Cr.11% 92CS-...- 

World Bank 7% 99 F1_ 

World Bank 13% 92 AS. 

World Bank 14% 94 AS 

Zeotnpk. 13% 93 AS.— 

FLOATING RATE 
NOTES 

Alliance A Lefc-BM 94 £. 

Bank of Greece 99 US- 

Brighnn 91 US. 

CheJt.& Gloucester 94 E_ 

Credit Fooeier 98 US 

Drcsdner Finance 99 DM 

EEC 392 DM 

Halifax 8S 94 £. 

Inn. m Industry 94 £..._. — ... 

Leeds Perm. B/S. 94 £. 

Milk MkLBrd. 593£. 

New Zaaland 5 97 £. — 

Northern Rock 92 £._ 

State Bk. Nsw. 98 US 


famed Bid Offer dip weekVIeM 

150 96% 96% 0-0% 11.21 

100 95% 9640% -0% 1332 

100 100% 100% 0 40% 7J6 

200 93 99% 0 0 806 

100 193% 93% -0% 40% 935 
100 97% 98-0% 40% 14.98 

150 95% 95%-0%-0% 9.44 
200 101 101% -0% -0% 10171 

IDO 91% 91% 0-0% 13.04 

100 88% 89% 40% -0% 12.19 
150 91 91% 40% -0% 12.91 

100 193% 93% 0 015.13 

60 tl04 105 0 01238 

100 97% 98% -0% -0% 9.45 
100 99 99% -0% -0% 9.61 

125 196% 96% -0% 40% 1435 
100 tl02% 103% -0% 40% 14.00 
150 95% 95% 0-0% 10.52 

100 “195 96 0 0 7.95 

150 94% 95% 0 0 739 

150 98% 98% 040% 9.21 

100 94 % 94% -0% 40% 927 
100 98% 98% -0% 0 9.49 

100 98 98% -0% -0% 9.50 

75 197% 97% 0 010.89 

100 94 94% -0% -0% 9.74 

100 198% 99% 0 40% 11.15 

125 99% 99% 0 40% 10.99 

60 93% 94% 40% 012.82 

100 101 % 102 - 0 % 01122 
150 100% 101% 0-0% 7.69 

400 101% 101% -0% 40% 10.68 
150 88% 89% -0% —l 12.40 
100 92 92% 0-0% 12L87- 

100 197% 98% 0-0% 1L45 

100 198% 99% 0 40% 14.99 

100 90% 90% -0% -0% 13.14 
150 98 98% 040% 1035 

125 91% 91% -0% -0% 1237 
200 97% 98% 0-0% 10.93 

100 196% 96% -0% 40% 15.06 
250 93% 94% 040% 938 

100 tl02% 103 -0% 40% 14.04 

100 100% 100% 40% 0 11.05 

150 97% 98 0-0% 10.93 

150 100% 101 0 011.00 

300 94% 95% 0-0% 7.90 

100 T100% 101% 0 40% 12.87 

75 100% 101 -0% 40% 13.96 

75 (96% 96% 0 40% 14.41 


Woolwich EwJt-BS.93L. 
t595£™ 


Woolwich 5 ‘ 

Average price change.. 

CONVERTIBLE 
BONDS 

Aicoa6%DZU5- 

Amcr. Brands 7% 02 US 
CBS. hK. 5 02 US 


Bid 

.08 99.74 

0% 9956 
0 100.13 
.063 99.73 
-063 99.91 

.031 100.08 
0 100.08 
A 100.05 
0% 99.95 
0% 100.05 
DA 99.79 
.07 100.04 
0% 99.82 

088 100.01 
0% 99.92 
0% 9959 
On day 0.00 on 


Cm. Cm 


Offer C2ta Ccan 
99 7924/011521 
99.66 8/03 9% 

1002321/02 8.81 
99.78 28/02 1521 
100.0120/04 831 
100.1928/01 8.16 
1000822/02 6% 
100.10 9/0215.16 
100.0617/01 1529 
100.1015/01 1537 
99.84 29/1214.94 
1002422/02 15% 
99.87 20/01 5% 
1002111/02 8.81 
99.9715/011537 
99.94 22/02 1531 
week 40X13 


Chg. 


SWISS FRANC 

STRAIGHTS 1 

African Do*. Bk. 5 96. 150 > *|90 91 

Asflnag5Q3. 100 *185 86% 


BM Offer dxy wm* YMd Lfad 


Asflnag £ — — — 

B.F.C.E. 4% 98 200 t87% 

B.M.W-FIfl-Neth. 513 ISO *185 85% 

8rltaaala B/S.4% 94 100 *186 88 

□R. Int- W/W 3 93™ 125 188 90 

Crvflt Lyonnais 4% 00. 100 186% 87% 

E.I.B4% 98 - 150 186% 87% 

_ _ n Um 

no US 83% 

» m « 

M *S7 as 

m * 08 % 

100 

150 17V% 

75 *«6 

TOC HU 

151 184% 

200 *» 

ISO 157% 


— -B4% ‘ — . 
Finn. Exp. Cd. 8% 1 
ReU»adL4%9B__ 
LAD. H. 65 



84% 

m 

83% 


«MdM5n 


faenge NiN OngL. He d* 0 ■ MU -0% 


0 - 0 % 

040% 

0 40% 
0 - 0 % 
0 0 
0 - 0 % 
0 - 0 % 
0 - 0 % 
0 - 8 % 
D -«% 

s 

8 . 8 
0 -0% 
0 -*0% 
0 40% 
0 - 0 % 
e -i% 
8 4% 

e -l 

o +1% 


621 

7.76 

630 

6.49 


748 

6.44 

657 

8.07 

753 

9.42 

857 

759 

668 

757 

633 



W.R.eact6%02l& 


*2% 646 

-«% Taoi 
11S56 
-D% 2&12 


* No idfdrflUUon avallable-wevl u m day's price 
t Only one market malar applied a price 

Strairfl Bonds; The yleW 8 the yield to redemption of the mid-price; 
the amount Issued Is in ibIIIIom of currency units except for Yen 
bonds where HNkt bllllm. Change Oft week -Change over price a 
weak earlier. 

Float too Rate Notes; Denominated In dollars untas otherwise Indi- 
cated. Coupon shown Is minimum. C.dic - Date next coupon becomes 
effective. Spread -M*gJn above sbe-month offered rate ttthree- 
month; gabow mean rate) for US dollan. C.qxs-The current 
coupon. 

Convertible Bonds: Dennmbatod Is dollars miltss uthenrlse Indicated. 
Chg. day -Change oo day. Cm date-Flrst date of conversion Into 
shares- Cnv. price - Nominal amount of bond per share expressed 
reeurrency of share at common rate fixed at tome. Pram ■ Percent- 
age preminm or the cunemeffecthie price of acquiring shares via the 
bond ova- the mast recent price of the shares. 


e The Financial Times LuL, 1989. 


. ht whole orjfi. 
applied by OAT 


la any form not permitted without written i 
M international. 



NEW ISSUE 


These securities having been sold, this announcement appears ax a mailer of record only. 


December, I9S9 



KYOKUTO BOEKI KAISHA, LIMITED 

(Kyokoto Boeki Kabnslnki Kaisha) 

“■ ~ " . Tokyo^Japan 

DM 50,000,000 

1%% Guaranteed Bonds 1989/1993 with Warrants 

to subscribe for shares of Common Stock of Kyokuto Boeki Kaisha, Limited 
unconditionally and irrevocably guaranteed by 

The Bank of Tokyo, Ltd. 

ISSUE PRICE: 100% 

Daiwa Europe (Deutschland) GmbH 

Bank of Tokyo (Deutschland) AktiengeseDschaft Dresdner Bank AktiengeseDschaft 

Bayeriscfae Landesbank Girozentrale Bayerische Verdnsbank AktiengeselLschaft 

Commerzbank Aktiengese lls c h a ft Dentscbe Bank Aktlengesdlscliaft 

DG BANK Deutsche Genossenachaflsbank Mitsui Bank (Deutschland) GmbH 

Morgan Stanley GmbH . The Nikko Securities Co^ (Deutschland) GmbH 

Nomura Eun^ie GmbH Westdeutsche Landesbauk Girozentrale 

Yamaidif International (Deutschland) GmbH Yamatane Securities (Europe) Ltd. 


JEXRO 

tEoToiti' 



SOAS 


THE SIR PETER PARKER AWARDS 
FOR SPOKEN BUSINESS JAPANESE 
1990, The Inaugural Year 
Sponaredby: NOMURA INTERNATIONAL PLC 

Supported by: JAPAN AIRLINES CO LTD 


JETRO (Japan External Trade Organisation) 
and SOAS (School of Oriental and African Studies, 
University of London) 

Open to residents of the European Co mmunity 

For further mfanmtioii about the Awards either complete 
and return the coupon or telephone Peter ^ Whitaker at SOAS, 
01-637 2388, before Friday 15th December, 1989. 


For fim h q info rmation pteue return thbow ip oo, before Friday 15th 
December 1989, »: 

Whitaker Esq, SO AS, Unhcnky of London, Tbomhaueh Street. 
Russell Square, London WC1H0XG Tel: 01-6372388 

Name: ... 


Address: 


Td.No. 



MALAYSIA 

US $300,000,000 
Floating Rate Notes due 1992 


In accordance *iih the provisions fifth* Notes, notice is herebv 

given dun for the six months Interest Period from 7th December 1989 

to /th June 1990 die Notes will carry an interest mte of 

8% per cent per annum. The relevant Interest Payment Dale witl be 
7th June 1990 and the Coupon Amount per (JSS 50,000 
will be USS 2,132.81 and per USS 250,000 will be USS 10.664.06. 

Reference Agent 

Bank of Tokyo International Limited 



INTERNATIONAL 

PROPERTY 

For details & rates 
please phone 

CLIYE BOOTH. 

01-873 4839. 


TOP rauiNCC [BERMUDA) n LTD 

FMIngfMi Uo«M due 2000 

NoUca ta famby given that tortalnana 
period from 7«i December. 1989 to 
7nikfiB,i99DlhenQhn«lanyin 
bRDrasirai8afa387B%pernnuffL 

Cmb9chiBnmc 

Agent Baric 


mark?: 

c ert 
.T’-iawr- 
.•??rcjd 
•fcr’iSiii- 

' 3J4i 
rJi aur- 
i COiiTt- 

‘i • 12 


h-;v 

1 »v . 

r , *- 

.■ 

a> J 


V* 






t 

t 




INTERNATIONAL CAPITAL MARKETS 


Merrill to pull 
out of dealing 


in Euro-paper 


French 
insurer to 
buy 4.9% 
of MBIA 


Stephen Flcfler, Euromarkets Correspondent 


By George Graham 
in Paris 


MERRILL LYNCH, the fourth 
largest dealer in the Eurocom- 
merclal paper market, has 
informed clients it intends to 
pull out of the business. 

The move, which surprised 
competitors, follows a period of 
stagnation in the market Out* 
standing Eurocommercial 
paper is estimated at $70bn, in 
line with the level at the year- 
end. 

Merrill's is the most signifi- 
cant withdrawal from the mar- 
ket since Salomon Brothers 
announced in October 1987 
that it was to pull out of 
money market operations in 
Europe and the US. 

Merrill has told clients it will 
gradually run down its busi- 
ness as alternative funding 
sources are found. It is likely 
to have withdrawn completely 
some time next year. 

It said the move would not 
affect its bigger commercial 
paper business in the US, 
where it is the largest dealer, 
or other money market and 
medium-term note operations 
in Europe. 

Merrill is a dealer on 197 
Euro commercial paper and 
Eurocertificate of deposit pro- 
grammes, and is principal 
fl gmt on a further 23 so-called 


revolving underwriting facili- 
ties. 

It said it had decided to pull 
out because of "diminished 
expectations of the long-run 
potential of ECF.” Eurocom- 
mercial paper had "foiled to 
show significant growth, in 
contrast with other parts of the 
market" 

The market has not been 
highly profitable. Low margins 
have led many commercial 
paper dealers to combine their 
commercial paper operations 
with a general money markets 
desk. 

As Merril l has tightened 
headquarters control over its 
London operation, its London 
money market business was 
one of the last to report to New 
York. Competitors said they 
assumed the decision reflected 
how a stagnant and barely 
profitable business did not fit 
with head office strategy. 

Merrill played a prominent 
part in the growth of the mar- 
ket, and is dealer on several 
important programmes, includ- 
ing those for the Australian 
Wheat Board, Sweden and 
Spain. Its market share was 
assumed to be about 8 per emit, 

although the firm tW-iirmq to 
comment on that figure. 


Financing for Gateway 
buy-out wins firm support 


By Stephan Fkiler 


S.G. WARBURG said yesterday 
that it had found firm support 
for a £lJ36bn ($2.1Sbn) lever- 
aged buy-out financing for Isos- 
celes. the company formed to 
buy the Gateway supermarkets 
group of the UK, as the com- 
pany indicated its performance 
was currently running ahead 
of budget 

Warburg closed syndication 
on the transaction on Tuesday. 
It said £807m represented the 
amount sold down to other 
banks and substantial desired 
final commitments of the 
underwriters. The remainder 
will remain on the bobks of 
underwriters. 

It admitted that the syndica- 
tion had been made more diffi- 


cult by "current concern relat- 
ing to leveraged buy-outs in 
the US and the UK.” But, in 
the circumstances, the under- 
writers of the senior loans 
were "comfortable with the 
transaction and with the per- 
formance of the company to 
date." 

The syndication widened the 
banking group to include a mix 
of British, continental Euro- 
pean, US and Japanese institu- 
tions, Warburg said in a state- 
ment 

The statement quoted Mr 
David Smith, Isosceles’ manag- 
ing director, as saying that the 
company’s moves so for to 
strengthen Gateway had been 
successful 


CREDIT Local de France, (he 
French state-controlled local 
authority financing sp eciali st 
is to pay around FFrSOOm 

($49m) for a 4-9 per cent stake 
in MBIA, the leader In the US 
market for municipal bond 
insurance. 

The two groups plan to 
build on each other’s expertise 
in their local markets, with 
Crddit Local developing an 
activity in guaranteeing 
municipal bond issues in the 
US and MBIA seeking to set up 
a subsidiary in France to look 
for opportunities in the Euro- 
pean market. 

The two markets are differ- 
ent. Most US local authority 
financing Is carried out 
through direct issues of tax-ex- 
empt bonds. To ensure a good 
rating for these bonds, the 
issues are often backed either 
by an insurer or by a letter of 
credit from a bank syndicate. 

However, the two companies 
expect an increasing transfer 
of techniques f r om one market 
to the other, especially as the 
possibility of direct ftmding of 
local authorities and of infra- 
structure projects opens up in 
Europe. 

Credit Local hopes to build 
its presence in the letter of 
credit segment, using its AAA 
credit rating^ with a target of 
9100m of business In the first 
six months and 9500m a year 
within two years. It wifi use 
MBIA's expe r ience In evaluat- 
ing issues, but this activity is 
-expected to complement 
MBIA's insurance of municipal 
bonds. 

Around 40 per emit of the 
9120bn a year of US municipal 
bond issues is guaranteed, 
with some $20buin the formed 
letters of credit and 932bn 
guaranteed by Insurers. MBIA 
- originally the Municipal 
Bond Insurance Association, a 
consortium set np by four 
large US insurers - has 
around 38 per cent of its mar- 
ket segment. 

Credit Local finances around 
45 per emit of local authority 
borrowing In France, and 
expects activity in this market 
to stagnate in the years to 
come. Therefore, it has been 
seeking to develop its business 
overseas. 


FT-ACTU ARIES SHARE INDICES 


These htcfices are the Joint compi a iion of the Financial Times, 
tim Institute of Actuaries and the Faarfty of A c t ua rie s 


EQUITY GROUPS 


Fri Year 

Dec ago 

1 (approx) 



Japanese warrant issue leaps to big premium 


By Andrew Freeman 


SECONDARY TRADING on 
the Eurobond markets was 
very slow yesterday, and deal- 
ers concentrated on placing 
paper from recent new issues. 
The Ecu sector saw lively busi- 


NEW INTERNATIONAL BOND ISSUES 


INTERNATIONAL 

BONDS 


B nn qw r 
US COLLARS 

tahlhawajifna-Harima Heavy® 
Development Bai* Turkeyfb)* 
Sumitomo Cflip.Oww»( 6 J® 
Ntchiel Co. [■)*»♦ 


2 I 4^h Yametetil hit (Europe) 
1%/l£ Deiwa Europe 


9V 100 1B96 ift/llt DahwituroP* 

ala ini, 1992 1 Daiwa Europe 

2 <C 100 1093 2 vV *2 YamataW tnt (Europe! 


LORE 

Ferrovte delta S»to(c)$+ 


70/40bp Banco dl Roma 


D-MARKS 

European Gael & Stee){b)ft 


iVrit Proedher Bank 


ness as Investors were per- 
suaded to buy high-yielding 
paper. 

On the primary market, 
patchy business suggested that 
some syndicate managers were 
eyeing the end-of-year league 
tables rather than responding 
to genuine investor iteinawrf 

However, Yamaichi brought 
a 9500m deal with equity war- 
rants for Ishlkawajtma-Harlma 
Heavy Industries to a premium 
almost as spectacular as the 
borrower's name is long. The 
bonds traded from their par 
issue price up to a closing level 
of 110 'A bid, buoyed by the 
strong equity market in Tokyo. 

S.G. Warburg was the lead 
manager of an increased £175m 
mortgage-backed issue for 
Temple Court Mortgages No.l, 
a special-purpose vehicle for 
Legal & General, the UK 
finance and insurance com- 
pany. 

The notes offered a yield of 


STERLING 

Temple Court M'cafle N. 1 (d)*+ 


&& Wertwro Secs. 


Torofflo-Oomlntarr Banfc<e)ft 4 bn 8 *a 101 »a 1991 1 VS New Japan Secs. BKope 

♦★Private placement, *Wtai equity warrants. ^Floating rata notes. ♦ Final terms, a) Coupon cut 

Non-call able, c) Equal to B-month UNO. First coupon Itxofl at 12 . 7 % (annual). Can from Janu ary ’19 91 and Q" c otyon dwaa 
thereafter at par. d) 25 bp over 3 -month Libor, rising to SOhp after 10 yearn. Average me B >2 years, e) Redemption unuu ® 
Nikkei Stock Index. 


New Japan Sees. Europe 


25 basis points over three- 
month Libor (London inter- 
bank offered rate), and were 
reoffered to investors at 99.65, 
implying a 10 basis point fee 
for the underwriting banks. 
The syndicate agreement was 
still in force at the end of trad- 
ing, and Warburg said it would 
probably allow the notes to 
trade freely this morning. 

Daiwa brought two deals, 
both 9100m straight issues, to 
TniTpri receptions. A three-year 
deal for Su mito mo Co r p o r ati on 
Overseas Capital offered a 72 
hauls paint spread over Trea- 
suries, which many traders 
said was very tight 


Daiwa said the pricing was 
competitive, and confirmed 
♦hut it b ad bought back some 
paper via independent brokers, 
noting that most of the bonds 
were taken by Sumitomo’s 

relationship tumim 

Daiwa quoted the paper at 
less 1.43 bid. outride full fees of 
1% point. Away from the lead 
manager, traders offered pices 
of less 1.60 bid, implying a 
spread over Treasuries of 
nearly 82 basis points. Pro- 
ceeds were swapped, probably 
into yen. 

A six-year deal for the Devel- 
opment Bank of Turkey was 
also roundly criticised by the 


market for being very tightly 
priced. 

The par-priced bonds offered 
a yield of 220 basis points over 
Treasuries, but the paper was 
fudged too tight at around ISO 
basis point over Libor after 
asset swaps. Proceeds were 
swapped Into floating-rate dol- 
lars. 

Daiwa defended its Issue, 
saying that it had sounded out 
the market three days ago and 
had found several banka with 
good demand at the indicated 
terms. An official said the 
hnnris were bid cm fees at less 
1%. amid tm*n amounts of 

w»IHng . 


Treasuries show little response to latest Tan report 


By Janet Bush in New York and Rachel Johnson In London 


US TREASURY bonds 
remained in a tight trading 
range yesterday and reacted 
little to the publication of the 
US Federal Reserve's latest 
Tan Book, a report on the eco- 


GOVERNMENT 

BONDS 


Timyiir situation from regional 
Fed banks. 

At midseBsion, bond prices 
across the maturity spectrum 
were quoted unchanged or up 
to A point higher and lower. 
The Treasury's benchmark 
long bond was unchanged for a 
yield of 7.88 per cent Prices 
have moved little this week as 
traders wait for tomorrow’s 
November employment report 

There has been little eco- 
nomic news this week to push 
prices out of their tight ranges. 
The Fed funds rale has traded 


steadily all week at between 
8Y> per cent and 8ft per emit 

The Fed’s Tan, or Beige, 
Book, used as a guide to set- 
ting monetary policy within 
the Federal Cfoen Market Com- 
mittee, said that most Fed dis- 
tricts reported some falls in 
manufacturing but that there 
were also pockets of strength. 

It also noted flat or modestly 
increased input prices and a 
varied experience in consumer 
spending. The overall message 
was one of weak signals on 
interest rates. 


BENCHMARK GOVERNMENT BONDS 


Coupon Mi 


boa 

was stffl HH^y top 
ouaiy lute, the INK) 
the -I@sS indicators. 


t&fiOO 9192 
9.730 1 / 9 B 

9.000 10/09 


103-07 -6/32 

93-11 -W32 

91-18 - 12 m 


US TREASURY * 7.785 11/89 

8.125 8118 


100-12 +0/32 

10228 +3/32 


JAPAN NO 111 4.600 6/88 

No 2 5.700 9IB* 


94.8807 + 0.001 
101.7728 +0.080 


GERMANY 7.000 9/99 

FRANCE BTAN 8.000 10/94 

QAT 8.125 6 W 


98 J 00 Q + 0 J 50 

94.2945 +0074 
94.7200 +0200 


■ A COUPLE of figures hint- 
ing at a slowdown in the West 
German economy in the short 
term boosted bunds yesterday. 

They rallied half a point as 
manufacturing orders dipped 3 
per cent for October and the 
trade balance confirmed that 
growth had slowed. 

The bund future on Liffe 
opened at 90.87 and dosed half 


CANADA * ftgSO 12/89 

NETHERLANDS 7.250 7/99 

AUSTRALIA 12 JJ 00 7/99 


B7.12S0 

98S200 +0250 
93.8717 -0.383 


London dosing, 'denotes New York 
Yields: Local market standard 


moraine session 
Price*: US. UK In : 


, often in decimal 


recedes/ MsMTIAS M» Nero 


a point higher at 9L29. 

In the cash market, the 


per cent 

However, UBS Phillips and 


December 1999 bund with a 7% Drew put In a note of caution 
coupon moved 40 pfennigs that toe slowdown in the econ- 


higher, to close yielding 7JL9 omy would probaWy prove to 


LONDON MARKET STATISTICS 


RISES AND FALLS YESTERDAY 


LONDON TRADED OPTIONS 


British Funds 

Corporations, Dominion and Foreign Bonds 

Industrials — 

Financial and Properties — 

Oils - 

Plantations — 

Mims - 

Others — 


Totals — - 


LONDON RECENT ISSUES 


EQUITIES 


AflT-t Lust 
Paid IfenncL 


Date High I Low 


Ob CWUYkfdk 


F.P. - 

F.P. - 

f.P. - 

FA - 

F.P. - 

FA - 

F.P. - 

FJ>. 2/11 

F.P. - 

F.P. - 

FJ>. - 

F.P. - 

FA - 

F.P. - 

F.P. - 

F.P. - 

FA - 

F.P. - 

FA 

F.P. 30/12 
FA - 

Ft. - 

Ft. - 

Ft. - 

FA. - 

F.P. - 

FA - 

Ft. ~ 

F.P. - 

F.P. - . 

F.P. - i 

FA - | 

F.P. - I 

FA - 

FA - ; 

F.P. - 

FA - 

F.P. - 

FA - 

FA - | 


78 51 

85 81 

£ 

m iso 

102 45 

91 8 b 

71 56 

25 23 


NM Bn* Daw B Wfc. 

Mir Linton 5p 

■AuJm ol CHUlOrtloo 5p _ 
BIK Warrants 1993/94- 

WaSHfttaMp - 

MatoW&rtwrtiSOp- 

WAGnupSp 

KnaMdgt Giil bSp 


R£ 2 S 15 35 12.9 


■BBSS 




$ 


tartan Aria Tim life — 

D&wemsl) 

EFMOnggnTaWntalE 


U H 14 4 LJ 
B 25 35 U 102 
LAS 05 167 
- - - M 


ACTIVITY on the London traded 
options market yesterday was 
brisker than ol late with a total 
volume of 43,157 contracts traded. 
This was made up of 33,144 calls 
and 10,013 puls. 

The FT-SE option was the most 
active single contract and saw 
10.220 contracts traded. Call 
transactions exceeded put trans- 
actions by about two to one with 
6.847 calls and 3£73 puts traded. 
There was an absence of large 
trades end most of the activity 
was between market makers, but 
the tone was very bullish with 
traders buying calls and selling 
pula. 

The top Individual stock yester- 
day was again Dixons’, which 
traded 5,852 c ontra cts on news of 
«e hostile Kingfisher bid. Early 


on there was a lot ot contract 
closing, followed by good 
two-way trade t h rou g h the day. 
The December 130 dalle were 
most active with a total of 1,315 
contracts. Call volume far 
exceeded put volume with 6,505 
versus 3,348 contract s. 

British Gas was the second 
meet actively-traded stock with a 
total of 44719 co nt racts. Again, vir- 
tually ail the interest was on ths 
call side with 3,844 contracts 
transacted. Of these 2J2S7 con- 
tracts were traded In tiie March 
220 calls, including 1.500 at 13*4 
and 13%. 

Hanson ranks third with a total 
volume ol 2£54 contr a cts com- 
prising 2JSQ3 calls and 51 puts. 
The new month’s February 220 
calls saw 1,025 contracts traded. 


British and Commonwealth 
traded 2£38 contracts of which 
1,185 were calls and 1,051 puts. 
The April 1990 caUs and the April 
1990 puls both traded 1,050 con- 
tracts. In Lonrho 1,894 contracts 
traded of which 1,881 were calls 
and 13 puts. 

Trade was good in Cable & 
Wireless with 1,733 contracts 
traded, 'following news that the 
consortium to which it b el o ng s 
has won the Vie contract lor a 
cellular phone system in West 
Germany.' ■ • 

The other leading Issues were 
Blue Circle and British Telecom. 
Blue Circle trade totalled 1,438 
contracts Including 400 June 200 
calls sold at 43 am 400 June 200 
puts sold at 8. In BT, 1,060 con- 
tracts were traded. 


VS3 865 

» 5 

3 S 

138 130 

650 631 

197 98 

29 22 

775 862 

344 319 

’S i 

78 73 

B1 66 


&n>Wa*yUmlFFriO_ 
Eimpa Mints. Wirau — 


■158 1 23 64 I 84 




FMEetbTTMslOp 

GenbCMIcRL Is 1 


8447 Z2 SlO llOJ, 


Arid Lnm 420 77 95 192 lb 5 10 

<* 4 M> 460 40 64 70 5 b 13 20 

500 17 39 49 25 32 37 

ASM 110 12 19 23 4 7 9 

CUB) 120 8 12 18 9 12 14 

130 4 9 14 16 18 20 


CA11S FU18 

aura to A* to to Ay to 

SMI Tran. 420 67 72 to 2 7 IS 

W73> 460 33 40 55 7 14 21 

500 9 20 - » 32 - 


caus ms 

FW «V no Bw 


260 11 - - % - - 
ao t. 


110 9 15 17 3b 9 U 
120 4% M 12 U 14 17 




52 40 

28 17 

.25 17 

143 115 

83 75 

120 100 

162 159 


Ihstadi Jden Wftn. 
JFPtfllppiMFUU 

0a. WafT*to 

Lemuel OiW T«.~ — 

Do. Warrants ... 

4«fcUeg»cCfol4>lji_ 

•MW-5UCH 

MfJltoroioc.lt 

MltaiOTst&BsittigYSO 
Pacific Horizon be lib 

Do. Warrants 


W34 24 34 1123 


Brit. Nun* 180 37 43 
1*212 1 200 U 2b 

220 6 15 


« 12<i 4 

39 3 6 8 

18 13 14 17 


360 - 30 34 - 25 32 

377 6 - - 39 - - 


8245 I 3.4 (44 84 


90 M 21 
100 10 16 


22 7 19 12 

18 14 15 17 


WLBtantti 330 43 52 62 3»a 8 U 

P364 J 360 19 33 42 10 19 22 


MM im am Be Jw — tor 

FcrranU 40 7 10 11 4 6 7 

<H3 ) 45 4 6>z 8% 7 7li 8*1 

Wly Pet 390 34 48% 60k 12 19 22 

M07J 420171, 33 e* 26b 33% St 

tote lee M Apr Bw M ftr 


lflOO 32»j 71\ 94*1 13 32V 44?, 
1050 9k 46 68k 42 56% W 


016% I 71 94 36.6 


Pacffle PiqgWrnas 

Partridge Rot 4m Up - 


SfliKl B ft- 

cbn, A 541 75 - 

{•603 > 550 -86 

600 28 52 


*fiaMtofOton4l0p„ 
ffegaJ HnuJ G»p2p 

llRHUitoTAIMts 

JT<m,ltL4BanHinrao_ 
IfWacoIGnnplOp 


IDS 24 44 104 
W 4 J 5 26 7.4 7.0 

Ml LI il 0.7 


Boots 260 32 <2 

«8l) 280 15 28 

300 5 18 


UH5 J+U 


040% (34 3.4 74 
M6.0 | - |7.7 I - 


016% 6.9 (0.4 1404 
D44 ( 20 (62 ( 84 


BA 280 44 50 

nut 300 ZT 35 

330 6 16 


- 3h - - 

105 - U 14 

70 IS 26 30 

47 4 8 U 

34 9 12 18 

- 20 20 - 

55 2 5 6 

39 5 8 12 

21 14 18 22 


650 74 93 111 34, 12% 16% 
180 36 59 n U*2Blz 33* 
750 131* Xih. SPg 46b 55I| 59 

300 56 63 74 2 6 8 

330 30 43 54 8 14 IT 

360 12 26 34 ' 21 28 31 


B*reJaj* 500 52 74 82 2 14 38 

M49) 550 10 30 52 15 30 35 


Me Anp f* aw a* 


BteCkde 220 22 32 33 3 7 16 
MSB! 240 - - 22 - - 25 


British SM 110201a 21 
M281 120 11 16it 

130 - - 


27 la 11 a 


Bril Atm 500 

«19) 550 

600 


54 65 79 
27 37 54 
U 25 - 


18 27 35 
<3 50 58 


Britttfias 2n 27 31 31 
1*223 7 220 8 16 25 


FIXED INTEREST STOCKS 


Baa 1000 70 115 MO 20 25 38 

now 1050 37 83 UO 40 48 SB 

1100 16 57 - 70 75 - 


66 88 85 
« 56 62 
20 37 42 


BAT Ml 800 


toe AnttM Late* 

Me PM tease 

£ sp DMe HIS< I Low 


Oaring 
Price +* 
£ 


C A Wire 460 

(*526 ) 500 

550 


75 97 112 4 10 15 

42 67 83 U 23 28 

JJ 43 57 37 47 51 


74 98 125 
42 70 IS 

63 72 85 
32 46 60 
14 27 - 


2 4 7 

7 30 14 
19 24 27 

24 40 41 
47 65 M 

5 10 15 
17 23 28 
38 45 - 


Oban 140 9 17 22 7 14 tt 

(*1411 160 4 U 15 21 26 38 


725 70 100 122 3 12 17 
1*786) 750 43 82 104 6 17 25 

775- 22 63 87 13 24 3S 


(bnta-5Mi 600 50 85 100 5 18 32 

1*6*4 ) 650 15 43 65 20 35 47. 


9B.94 FA 994 97 ferttWi t». Tst U'iKSk. 062012 97i +4 

8965 £30 292 29<j PcMod Eas, 10 Hi* 1* Mtj Dt 2012 — 292 

loop F.P. 2202 ids 97p blrdCfTL 7p Cm. W. Pf- ZS09 lto +1 


F.P. 

FA 

PA 10/7 


MSI 97p art Ccu 7p On.O. PI Uto 98s +1 

tooi I 97 Gretas iMLllte m. am* fjao 99H +1* 

100p 93p 4B0re.725pCk.ta.aL PI. 15p 9Sp 

— 96b [teMklfate — 


CHS. Goto 1450 
1*1480 1500 


20 - - 5 - - 

4 - - 45 ~ - 


Bril. Tricon 240 
(*279 ) 260 

280 


40 49 54 
23 33 38 
10 20 26 


Conrurito 330 
1*377 ) 360 

390 


RIGHTS OFFERS 


Con. Onto 420 
1*485 ) 460 

500 


55 M 74 3 5 ID 

30 46 52 8 U 17 

12 2B 34 21 25 30 

74 82 92 3 6 8 

39 47 61 8 18 20 

15 26 40 23 39 37 


1H Zb 4H 
4 5«j 7H 
U 13 16 


WSkAte . 260 18 32 39 3 8 B 

f*274 ) 280 5 22 28 11 17 20 


tatanrSA 308 63 72 82 3 7 9 

«50f 330 38 50 62 9 13 17 


Itote 283 12 - - 6 - ■ - 

MS») .300 - 15 27 - 30 58 


360 20 33 38 21 27 30 


jagmia 330 - 45 48 - 'a 18 

i*S54> 360 9 23 30 13 » » 


AmaoB. 

Law 

PM 

Rawe 

V 

oae 

MU 

19fl 

Hfl 

19h 

Hi 

Sfl 

HM 

8H 

M 


Ml 

5*1 

m 


HU 

.. 


390 40 47 60 6 16 20 

420 18 30 45 IS 30 32 

460 4H U - 48 58 - 


M e m 600 72 S3 HE) 7 16 20 

CMS J 450 36 59 72 25 35 40 

GEC 200253237457 
(*ZL9> 220 U 20 24 9 U Q 


&Rm» U0 12 21 23 1H 5 > 
(169 ) UO 2 9!, H U IS > 


FINANCIAL TIMES THURSDAY DECEMBER 7 1989 




Other syndicate uwnben 
were divided. Most udd they 
thought the pricing tight, but 
that they had ma n aged to fell 
their bonds for asset swaps in 
the Far East They said the 
paper was trading attefod fata 
2 % bid on brokers' bombs. 

Banco <U Roma b rought the 
largest Euro-Ura lt$de, a 
Lsoobn floating-rate note for 
the statogoaranteod. Fenwis 
dello State- The notes offered a 
yield equivalent to six-mboth 
Ubid (London interbank Ud 

rate), currently around 12.70 
per cent annually, and were 
judged, by traders as fairly 
priced. Demand was steady, 
and the papa: traded on fees at 
9 & 30 bid. 

In Genntsiy. anudotherwtee 
quiet tradtog. Dnsraer Bank 
brought a uMlOOm five-year 
deal for European Goal A Steel 
Community. The heads were 
well received, and traded 
inside fees aUen IftJ&L Else- 
where. there .was .speculation 
that a Worid Bank deal maybe 

imminent 

• The Italian -Ttafsnxy is 
offering vmWtonjut stx-yoar 
government certifioates with 

options for ea rly redemptions 

coupon. is also 

reoffering Lt ,0001m ot Certifi- 
cates maturing 'November, 
1094. 


■ IN THE government 
bonds feU abotota ?* pednt in 
busy trading; al fi tett gn there 
was no obvimts diftnge of aen- 

♦iiwwf • ■ j 

Althouxh . noUtfeal nncer- 
teinty has beenptrtro^one side, 
rise maritet was stiff swept by 
rumour. Tbe big story was of 
an unwtodtng of a swap con- 
tract vrith a load authority. 
The benchmark Treasury ft per 
cent bond doe 'in 2006 lost 
about ? .ticks, whOa the ratii 
market feet abort A across the 
board. •- 

In the index-linked market, 
prices began to look expensive 
relative to conventional gilts. 
The £5 per cent index-linked 
stock lost tt as investors 
switched into fixed interest 

wfnrfcn 


35 64 18 12 Z 4% i # j 
« 3 6>2 9 6 6 8 1 


100 9 13 15 lit 4 6 

118 l*i 71, 10 5 7% » 


Here ( 10pm | Wlleltas. 8ratanlQp 


band MS. 550 34 52 70 12 2b 30 

1*5621 600 11 27 40 41 53 55 


law tan Envoi Lriare. 
ZhBBi \pm 9M0C01Q9-.--. 


EE. E 


LCL llM 75 97 125 18 42 30 

(*UAO USD 43 67 97 40 65 72 

12S0 22 44 74 72 9f U0 


tttow g)17|i 26 32 6 76 10 

«34) 340 6^ 16 20 17 U 21 

tjjSjH O 500 99 112 125 5 13 18 

C570) . 590 52 73 90 17 28 » 


Wren Sob tota W4B 

.40pn I 38pm ltMMSteta*!--. 


800 » 50 50 2 4 4 

850 2 4 4 13 13 13 

W0 b H h 65 63 63 


P. & a 550 75 81 94 Ut 16L ML 

(*598) 600 34(i 48V 644 221,351; « 

Hjtare 220 26 35 38 6 8 12 

«W) 240 14 23 26 14 IS 21 


TW 

(WI 

Than EMI 
t*776) 
TSB 
. P128) 


300 9 29 35 SV 12 » 

330 2 12 21 29 31 * 


_ *i v 

■fV 


MM 

rsuHi 




280 24 S 42 5 9 15 

300 13 28 S 15 20 25 


FradMH 300 33 39 40 


750 132 69 92 10 24 X 

800 7 » 65 37 « Sf 

110 ■» 21 26 ,X- .3 3 

ISO 9 12 2ff 1 f * 

UO ■ 7 Ub 204 4 n 3 

110 3b 10% 16.. 10 17 70 

700 48 85 US 7 S *[ 

750 20 SB » 27 45 60 


320 17 20 26 12 14 U 


fTaesaaxKMfl 
2101 2151 22W 2250 2344 tM 


S3 


300 30 42 47 9 U 15 
325 12 - - 16 


... 240 - - 40 - - » 

MW1 330 15 - - 15 - - 

8.TA 542 37 - - IB - _ 

0550 ) 550 - 43 U - » 35 

StoL&lkw 330 38 57 63 10 17 23 

P3») 360 25 40 48 29 » S 

tea, 180 22 7038h 3** 6 * 

nn> 200 10 16 V at, uv Mb isb 

220 3V 8b - S a - 


500 53 73 83 4 8 14 

950 S 42 a 20 27 35 


TRADITIONAL OPTIONS 


ZOO 12 21 24 4 7 U 

■220 3 10 - 17 17 - 


SE19HUpriG£ 15ft. to post 34p. 


■ • First Dealings Dee 4 

• Last Dealings Dec is Calls in ASDA, Alphameric, 

• last Declarations Mar 8 Ametrad, British ft Comnu, Can- 

• For settlement Mar IS pari, NatWast Bank, Richmond 

For rale Indications see end of Oil, Smith ft Nephew, Utd. 3cfen- 
London Sham Sendee Otic, 


260 » 24 34 12 17 a 

■280 6 U 24 23 28 30 

240 40 48 52 2 3 5 

2W 20 31 36 4 7 9 


CALLS 

Ok 273 223 177 129 90 54 30 W 

294 249 204 166 128 95 66 ^ 

Feb 315 2M 227 IBB 151 118 90 J® 

6tar 333 290 250 2U-U5 142 U3 86 

J»t 370 -20 -223 - U5 " 


UO 22 28 33b 3b 6 7 
200 W Ul, 214, Ub Mb 13b 


PUTS . • ■ 

Dec 4 5b 8 19 24 « {£ »* 

ta 13b 17 25 34 46 » « J9 

5*/ « .27 34 . 4S * 77 JO 

Mir »- 33 30 50 « 0 148 

to r 38 87 - 130 _ 


280 7 17 a 13 M 16 


160 9 13 15 5 9 10 

{Till UO lb 6 8 » a a 


Owasre 6 Tottl Ceoneu (US 7 
Cite 33444 Pm 10,00 i 

FT-SE laky cats 6847 Ml 3373 . 

*(MetAmtovieprto 



















































































FINANCIAL. TIMES THURSDAY DECEMBER 7 1589 

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1 

t 


FINANCIAL TIMES THURSDAY 


UK COMPANY NEWS 


Thames in £57m tender 
offer for US TV producer 


By Raymond Snoddy 

THAMES TELEVISION, the 
UK’s largest ITV company, yes- 
terday went ahead with a ten- 
der offer for Beeves Communi- 
cations Corporation, an 
independent US television pro- 
duction company. 

The deal values Reeves, 
mostly famous for situation 
comedies such as Gimme A 
Break and Kate & Allie, at 
around $89m (£57m). It would 
be Thames’ largest ever acqui- 
sition. 

Mr Richard Dunn, Thames 
TYianagiiig director, said yester- 
day that the acquisition would 
strengthen both Thames as a 
company and its attempt to 
retain its franchise in the com- 
ing auctions. 

Thames is hoping that the 
acquisition will increase its 
presence in the all-important 
US market which accounts for 
an estimated 65 per cent of 
audio-visual production. 

Thames vi pay for Reeves, 


which will be renamed Thames 
Television Inc. with 530m out 
of cash reserves and a JlOOm 
loan facility from National 
Westminster Bank, 520m of 
which Is on a revolving basis. 

In 1988 Reeves made pre-tax 
profits of $&S4m on turnover of 
5105.5m. The company makes 
much of its money from the 
syndication market — the sell- 
ing of former network shows 
from re-runs on independent 
TV stations. However last year 
the company foil to losses of 
$l4Jhn on turnover of 379.25m. 

Mr David Elstein, director of 
programmes at Thames, esti- 
mated yesterday that about 
three-quarters of the purchase 
price was accounted for by the 
programme library and the 
rest by the production com- 
pany. 

Mr Merrill Grant of Reeves 
will stay on to lead the existing 
town under new ownership. 

Ms Bronwen Maddox, broad- 


casting analyst for stockbroker 
Kleinwort Benson, said last 
night that the deal had to be 
seen as high risk. "They’re 
essentially paying for two 
shows one man," Ms Mad- 
dox sa id yesterday. 

Mr Dunn and other Thames 
executives were keen yester- 
day to distance themselves 
from the purchase by TVS 
Entertainment, another ITV 
company, of MTM, a US pro- 
duction company. That deal 
quickly went sour and MTM is 
expected to record a loss of up 
to $20m this year. 

"The Reeves acquisition is 
different In rela- 
tive size, in scope and in oppor- 
tunities for synergy that it 
offers,” Mr Dunn said. 

Thames believes that half- 
hour situation comedies are a 
more marketable commodity in 
syndication than the one-hour 
dramas such as Hill Street 
Blues that MTM specialises in. 


Christian Salvesen progress 
pushes shares up lOp to 170p 


By Jane Fuller 

CHRISTIAN SALVESEN, the 
frozen food and ind u strial ser- 
vices group, gave the stock 
market a pleasant surprise yes- 
terday with a 21 per cent 
increase in pretax profit from 
£27m to £32.6m in the six 
months to September 30. 

The share price rose lOp to 
I70p on the news, which 
included turnover up 19 per 
cent to £ 188.4m (£158fon) and 
earnings per share growth of 
27 per cent to ?.79p (6.15p). 

Star performer was the 
industrial services division 
which increased its trading 
prefit from £10 Jm to £13Rm. 

Mr Chris Masters, who 
became chief executive two 
months ago, highlighted the 
advance of the Aggrefco power 
hire business, which rents out 
generators for activities rang- 
ing from rock concerts to a 
variety of industrial uses. The 
company reckons to be In the 
top three In North America, 
Europe and South-East Asia. 

In the US, Mr Masters said 
Aggrekfco had grown from two 
depots in Louisiana three years 
ago to 30 depots coast-to-coast, 
encompassing 20 per cent of 
the market. 

The expansion in Aria had 
been boosted by the acquisi- 


tion this year of Singapore's 
laaiting gener a to r rental busi- 
ness. 

With two thirds of profit 
coming from outside the UK, 
pins a spread of sectors among 
its customers, file power hire 
business was well insulated 
a gains t UK economic difficul- 
ties, he said. 

UK-based Salvesen Brick, 
however, had been affected by 
the downturn in the building 
industry, but through a strong 
sales effort It had not so far 
had to reduce output Margins 
had come down, out the low- 
cost operations were well 
placed to gain market share. 

The second biggest contribu- 
tion came from the more tradi- 
tional vegetable processing 
activities and. the dedicated 
distribution work for Marks 
and Spencer. This division, 
known as specialist services, 
increased tearing profit by 16 
percent to SUm. 

An important factor was the 
opening of file Neasden distri- 
bution centre serving M and S 
in London. 

After a good summer for veg- 
etable crops, the amount of 
peas processed increased from 
63,000 to 70,000 tons. 

Less progress, however, was 


BUSINESS SOFTWARE 

Software packages are bought by businesses. 
The FT caters for businesses. 

Advertise your package In the 
WEEKEND FT every Saturday 

Telephone SIMON B4EFER 
on 01-873 3503/01-407 5755 for information. 


Tnwte by the tti afa r n i n fipn divi- 
sion, where trading profit 
advanced by 6 per cent to 
£&&ZL 

- Mr Masters said that while 
UK retailers used centralised 
anil sophisticated distribution 
systems, this was less so on 
the Continent and in the US. In 
both those markets the com- 
pany was switching the empha- 
sis towards distribution rather 
than hnik cold storage. 

But in France it had met 
fierce competition because of 
over capacity and a similar 
problem existed in the Los 
Angeles area. Bulk storage was 
prone to price wars, be said. 

Better news from the US was 
that a distribution contract 
had been won from the Grand 
Union supermarket chain, in 
the New York area. 

the interim dividend rises to 
from L7p to 2£p. 

• COMMENT 
After a few disappointing 
years, in which analysts recall 
excuses such as a poor pea har- 
vest or wnfap sP B i problems on 
the Continent, Salvesen looks 
set to achieve its po tential. Mr 
Masters is credited with both 
admitting the company’s past 
mistakes and having an 
aggiesrive approach to profit. 
It doss; however, r emain to be 
seen how quickly UK-etybe food 
distribution will catch on with 
different cultures. There is less 
to quibble with at Aggrekko, 
which apart from the scope for 
further geographical growth, is 
moving into mobile chilling 
equipment and air condition- 
ers. Full year forecasts are for 
£6Qm to £61m, giving a prospec- 
tive multiple of nearly 12. This 
is a fraction befow the food sec- 
tor and optimists believe that 
the company could continue its 
new-found role of outperform- 
ing it I 


Maxwell 
to pay 
£37m for 
rest of 
Pergamon 

By Andrew Hill . 

MR ROBERT MAXWELL 
yesterday spawned another 
private vehicle called Perga- 
mon to buy the outstanding 
shares in Pergamon AGB for 
£37. tm in cash, taking the 
market research group pri- 
vate. 

The UK publisher already 
controls about 65 per emit of 
Pergamon AGB through pri- 
vate interests. If yesterday’s 
agreed bid is successful it will 
leave Maxwell C ommun ication 
Corporation as the Maxwell 
empire's only quoted com- 
pany. 

Pergamon AGB, wMch has 
been hit by rising interest 
rates, revealed it had received 
an approach from its majority 
ihflnpfrn?Hw las t Friday after 
the shares rose sharply during 
the week, finally dosing at 

61p. 

Yesterday's agreed bid 
comes from a new company set 
up for the purpose, Pergamon 
Market Research (PMR) - a 
namesake of Mr Maxwell’s , 
first publishing ve ntu re. Per- 1 
gamon Press. It is offering 7Qp | 
in cash for each of the oat- j 
standing ordinary shares, i 


well Foundation, ultimate 
owner of many Maxwell inter- 


PMR Is also offering lOOp 
for mdi preference share, 

70p for each loan stock unit. 

Pergamon AGB is descended 

from me Industrial group Hol- 
lis, which S old Its anphtporlwg 
apd wprpJumting interests to 
management last year. The < 
professional services rnmn of 
thlTgnmpliId £134m forAGB 
Research last September, but | 
has since had to institute a j 
£100m p rogr am me of disposals 
to reduce borrowings. 

Sr Bernard Audky, AGB’s | 
founder who stayed on as : 
chairman of the merged group, ! 
said yesterday; "As things 
have turned out, I welcome the 
present development because 
the balance sheet is not 
strong, the gearing is very 
high and the need for invest- 
ment in market research is 
very great indeed.” 

He said he hoped in doe 
course the market research 
business might r et ur n to the 
stock market, bnt at the 
moment it could not promise 
short teem profits gr owth . 

Equity Consort 

Net asset value of Equity 
Consort Investment Trust ordi- 
nary shares rose to 582p at 
October 31, compared with 
549p and from 898p to 964p 
per deferred share. 

Half year earnings per ordi- 
nary were 18.47P (lL75p) and 
24.95P (17.49p) per deferred. 
Ike interim dividend is held at . 
4Jjp and a total of not less I 
than 30p on the deferred and a 
final of not less than Up on 
the ordinary was forecast. 


Off with the old: on with the new 

Paul Cheeseright looks at the scheme for winding up British Land 

— i« mnhmction with tiw 

M R JOHN RITBLAT, 
the British Laud 
chairman, has been 


M R JOHN RITBLAT, 
the British Laud 
chairman, has been 
worried for about a year con- 
cerning the discount of his 
group’s share pice to its net 
asset value. Last August he 
started working on a scheme 
with SG Warburg, the mer- 
chant bank, on hen? to bridge 
the 

The result arrived yesterday: 
a complex scheme which effec- 
tively runs down British Land 
and builds up New British 
Land, with shareholders hav- 
ing the chance to invest in tiie 
new company and to take out 
the proceeds from the sale 
of the old British Land port 
folio. 

Until their recent ran up, 
British land shares have hem 
languishing around 300p 
against a net asset value pub- 
lished last MlnrrJi of CTtp . Thu 
new scheme effectively puts a 
value on each share of 449p 
pins between 20p and 50p, 
depending an the calculation 
done to allow for the enhance- 
ment of British Land's net 
assets since last March. 

The new company will be 
ran like the old. It will be a 
property investment company 
with some dealing stock. It 
starts from about the same 
position the old company was 
In 10 years ago. 

New British Land is bring 
set np with a property ana 
finance portfolio worth £339m 
- the properties are largely 
those for rfw i ti ng by ™ 
did company. Each property is 
worth HMW C-gSwv 
New British Land is paying 
rid British Land with 74m new 
shares B1V ' vonom But 
British is immediately 
buying £U0m worth of con- 
vertible capital bonds in New 



British Land 

Share price rotative to the 

FT- A Property Index 


John RitMafc “Hidden value is 
of no value if fr cazmot be seat 
teed.” 

British Land, making New 
mwdi Land’s net amii obliga- 
tion for the properties £90m. 

This £90m Is effectively com- 
ing from NMB Postbank group, 
the Dutch bank. R is providing 
New British Land with a 10- 
year fixed rate unsecured loan 
of £50m and buying £40m of 
co n v er tible capital bonds. 

But the base of New British 
Land’s equity is £U.7m. com- 
ing from Mr Rithlat and the rid 
British Land management, 
which transfers to the new 
company. This sum buys 78.7m 
shares. But, of that total, 58.7m 
are subject to an option, the 
grant of which is related to the 
management’s future perfor- 
mance. If the option cannot be 
exercised the snares go to rid 
Brtfrigh Tjwh! 

The next tranche of New 
British Land’s equity will be in 
tile hnwri* of rid HriHaH TanH . 
shareholders. They are being 
offered in the form of a divi- 
dend of 13 New British Land • 


Shares in Builder Group 
advance 22p on rumours 
of a possible Emap bid 


By Nikki TaU 

SHARES IN The Builder Group 
jumped another 22p to 3Q2p 
yesterday on news that the 
board had received an 
approach which mi g h t lead to 
an offer being made for the 
company. 

Builder, which publishes spe- 
cialist magazines and periodi- 
cals concerning the building 
and property industry, 
HeHinpri to elaborate on its for- 
mal sta tement or to say when 
it expected to make a further 
announcement. 

There was also a formal "No 
comment” from Emap, the 
printing and publishing group 
which acquired a 9 per cent 
interest in Builder in August 

At the tim e, Em ap. which 
has an acquisitive past, said 
that its intentions were 
friendly and requested a meet- 
ing to discuss its investment 
Builder’s directors said they 
would see R map, bnt said any 
increase in the stake would be 
unwelcome and would not 
form "a constructive back- 
ground against which such dis- 


cussions could take place". 

'Yesterday, analysts were 
viewing Emap as the most 
probable suitor, although other 
some ramps — such as Reed, 
not thought to be likely - 
woe also being mooted. 

Builder ««» to stock 
market via an offer for Ml? at 
125p in 1988. However, the com- 
pany said yesterday that more 
than half its shares remained 
in the famiig of the founding 
Cox family and their descen- 
dants. Builder’s pre-tax profits 
in the year to March 31 woe 
£2. 75m. 

Saltire Ins Inv 

Pre-tax profit at Saltire 
Insurance In ve s tm ents for the 
half-year to September 80 fell 
from £274,473 to £146^79. 

Investment income was 
£286.478 (£363,676) interest 
receiveable £2,161 (£14,111). 
underwriting commission nil 
(£8£95). Net asset value 79.4p 
(7R6p)L 



shares fix every 40 rid British 
Land shares they already own. 
That accounts for 74m shares. 

JL over the years, the man- 
agement meets its performance 
targets then it wffl end up with 
27.6 per cent of the diluted New 
British Land equity, old British 
Land shareholders with 60 per 
cent and NUB Postbank with 
12.4 per cent. If the manage- 
ment foils to meet its targets 
thgn it wffl hold 7.4 per cent 
and tiie old British Land share- 
holders 80.2 per cent of the 
dilut ed capital. 

Here then is a new company 
which will have pro forma net 
assets of £30Q.7m or, folly 
diluted, 107p a share. And it 
will have a Stock Exchange 
IfeHng . ■ ■ 

The rid company wffl retain 
its listing but over tiie next 
five years it will be wound 
down, its remaining £Libn of 
p r up ei ty sold off as and when 
buyers appear with suitably 
large cheque boocs. B is the* 


sales, in conjunction with the 
New British Und equity, 
which provide the owwrtnnfty 
for old British Land sharehold- 
ers to jump over the discount 
at which thafr shares currently 
trade. 

The shareholders will be 

paid either in. dividends or 

through share mpatebaMS, or 

a mixture of the two, the better 
to minimise tax l ta WWte g. But 
they will not know when they 
wfH be paid: the two regular 
dividends a year have ended. 

Imme diately though, in addi- 
tion to the grant of the New 
British Land shares, rid Brit- 
ish Land sharehridera wffl be 
able to respond to A tender 
offer for tim re-purchase of 
22.7m shares - 10 per emit of 
the equity - at a price of 420p 
a share. Tbta is around 124p 
more than tim market price 
before the rub up started last 


There are. however, tax cred- 
its associated both with the 
repurchase and the grant of 
the New British Land shares. 
This prints up one of the rea- 
sons why the sort of scheme 
British iJmA is undertaking 
has not been seen before. 

Liabilities to capital gains 
tax have deterred the sate of 
properties from established 
portfolios- They have been a 
factor taken into account In 
the of the tradi- 

ttmal discount at which the 
property investment compa- 
nies have .traded' -on the mar- 
fcrt- 

But the ability to offset 
advanced' corporation tax 
against capital gains tax In the 
1987 Financ e Act and the 
equalisation of Income tax 
rat* wttii capital gains tax 
rntec in the 1989 Finance Act 
hove changed the playing field. 


Good debut for UMECO 


THE FIRST results of UMECO, 
the specialist engineering busi- 
ness, since its flotation on the 
USM, showed pre-tax profits up 
19 per cent from £318.000 to 
£378000 for the six months to 
September 30 1988. 

Turnover rose 8 per ctiti to 

£5. 17m. Tax was ElU.099 


(£78,000) -and earnings per 
share came to 4Bp (4-4p). Thera 
Is an interim dividend of 
L575p. 

Mr George Metcalfe, the 
chairman, said management 
was very active developing 
each of the existing 
hualBesMSk 


DIVIDENDS ANNOUNCED 


Albion ——Jin 

Amoco ■ .. — Int 

Amo Rubber —Jin 

BTP Int 

Caftyns Int 

Oanmrtdt IMS S Int 

Cq ibto b —fin 

Donates (RoM U) bit 

Embassy Prop § Int 
-Equity Coitaort — -Int 

-Orsons Xtofl Int 

Hardenger Prop — .tin 
Joaapb (Laopoid)— .int 

Latham (Jamas) Int 

Hordes a Craw * — Int 
Monotype Corfu —int 


Rowl na on Sacs — Int 

SaatcM A Saateh fin 

Satmaon (Chris) — .Int 

Ttphook — Int 

UMECO § Int 

Wtwssoa fin 


1«fl 

- 

1.4 

ai 

ZA 

0J 

Apr 6 

■ 

• 

1.125 

11Jt 

. 

10 

16.5 

14 

2.75 

Feb 1 

2JS 


7 

5 

Jan 15 

6 


11^ 

1.86 

Jan 29 

185 


5.55 

3.0 

Jan 31 

3J3 

6.1 

6 

3 

Feb 26 

2 


&5 

2 

_ - 

- 


Z2 

4J5 

- 

45 


105 

ZB 

Feb 2 

2.6 


A7 

19.876 


15 

28.125 

22.5 

3.1 

Jen 5 

3.1 


1585 

4J25 

- 

'4 

>b 

10.75 


Feb 2 

1.3 


3.83 

nu 

- 

1.7» 

V 

1.7% 

5* 

Fab 12 

5 

m 

16 

024 

- 

024 

w 

1^5 

1 JB 

Apr 6 

as 

9 

18 

2JS 

Feb 10 

1.7 

■ 

4.8 

2.7 

Jan 31 

2-15 

m 

7 

1^75 

Feb 14 

• 


- 

3.75 

- 

3 

5 

4 


Dividends shown pence per share net except where otherw is e stated. 
“Equivalent after allowing for scrip issue. tOn capital Increased by 
rights and/or acquisition issues. 9USM stock. SUnquoted stock. {Third 
market ^Carries scrip option. JFor is month period 


TMuanunnicematf a pp ear s oa a maagrtf record awfr 


Clynwed International pic 

£ 100 , 000,000 

Multiple Option Facility 

Arranged by 

Midland Montagu 
Underwritten by 

Canadian Imperial Bank of Commerce Midland Bank pic 

Deutsche Bank AktiengeseDschaft Barclays Bank PLC 

LMdaaSmdi 

Dresdncr Bank Aktieufleseflachaft Lloyds Bank Pic 

loota g nat 

MeDon Bank National Australia Bank Limited 

National Westminster Bank PLC Hie Sumitomo Bank, Limited 

Union Bank of Switzerland 


Additional Ttertder Panel Members 


Allied Irish Banks pie 
Banca Co mm cro i alc Italians 

Union tandi 

Banca Naztonale del Lavoro 

LoklM Bunch 

Banco di Napoli 


A n ffiterdanrf totteribm Bank N.V. 
Banca Commerciale Italiana of Canada 

Banca Natioorie del Lavoro rtf Canada 


Bating Brothers & Co, Limited = 
Gredito Italiano === 


Credit Lyonnais Gredito Italiano 

London Brwcfe I n0« o * — e h 

IstimtD Bancario San Paolo di Torino National Westminster Barit of Canada 

LmSea Beat* 

The Sanwa Bank, Limited The Tbronto-Dominioa Bank 

Union Discount Company limited 


Agent Barit 


Samuel Montagu & Co. limited 



November 1969 


Dk 14 

Deo. U 

-leu. VS 

Dec. 18 

Dec. 14 

— • Dec. S 
. — . Dec. n 


BOARD MEETINGS 

^ — 

MmVrw- Mnpring Cocp. Channel Express. >V«er Seph*- 

OeyMOM. Do La Rue. Druremaode. FeeU- HJil Orp 

bee*. Omhwm WootLQreel Universal Shires. Le— L*0*n Jj 

Grsycoat Mnpi. Johnson tcaotwy. McOor>- JfcrWeoOrts* 

•M Mart* DMMara. MS M. MW«e Wtwm- *”» — : 

taraed, Philips Lamps. Phoe/il* Umber, ws ey c i oi .......... 

PBdnQlon. Robertson Group, Zanrtpsa Gold 

IHnfcxj. fas* Ueeurs Corp ml 

Finals- Archer (AJ). Carr"i iflBtng bide. ""Co 

Grend Met owaiove*. Murry Q eerprtss. Wswtfn — — - — . 

Urban Inv Co 


= AVIATION IN ASIA THE PACIFIC 

HH The FmaKial Tnnes proposes to publish 

= this survey on: 

8 th February 1990 

= For a foil editorial synopsis and advertisement details, 

= please contact: 

HH PENNY SCOTT 

S re 01-873 3593 

or write to her at 

u ; Number One 

=: Southwark Bridge . 

London 

B SEl 9HL 

S FINANCIAL TIMES | 

1 ■ : iwomiuiUHNiswrw.. I 


m AVESCO pic 

(fo c o r pcw te d and registered inBn^and No. 1788563) 

= NOTICE TO 

= HOLDERS OF BEARER SHARE WARRANTS 

HH INTERIM STATEMENT AND DIVIDEND 

52=5 At % Directors’ Meeting held on 6th Decenier 1989 

S5 Avesco pic decked an interim dmdetid ofOip (net) per share 

=5 fa|foe^^mded31gMaidi 1990 whfchb payable on 

Hokieas ofBeirer Share Warrants who wish to take up 
-- the interim dividend for the year ended 31st Manh 1990 must 


their name and address either at die arfflress of Avesco ric sec out 
below or at Eempeh & Co NY, Herengadxt 182. PO Box 11363, 
1001 GJ Amsterdam, at which addresses copies of the Interim 
Statement of Avescopk: for the six months ended 
30th September 1989 are also available. 

BYOiyDEROFTHEBOARD Registered Office: 

Ve ntu re House • 

NS Conn .- Darts Road 

Seraenjy . Chetetnacn 

6* December 1989 Sarrey£T91TT 



On August 17th, 1989 Ash Gupta Communications Group 
completed the management buyout which reasserted 
the independence of the Group. This action was vindicated 
by the recent win of the substantial Air UK advertising 
account and the opening of a frill service office in London. 

The Directors would like to thany 
the following for their advice, assistance and guidance; - 

TOUCHE ROSS & Co. — corporate finance 
SHEPHERD & WEDDERBXJRN ^S.- corporate law 
ERNST & L73UNU-AXXCTONTANCY&TAX 
BANK OF SCOllAND- 

ash g u pta 

COMMUNICATIONS CROUP LTP 

A.. C > l .,ni,..D ( „„.,„ 1|0 ttKL.TtQM, 

Co.tes Crescent. Edinichcb EH, 7 A L • T . , „ 3 , , j , s8 , 





27 




FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


IT’S 4Nf POSSIBLE 


Slowly, with expression 


Music by A. MANZANERO 
Lyric by SID WAYNE 



© Copyright 1968 and 1970 by Editorial Mexicans de Mnaica SA DE CV. 

All rights for the British Commonwealth (excluding Canada and Australia) controlled by BMC Manic Publishing Ltd* 3 Cavendish Square. London WLM 9 HA. 
International Copyright Secured. Reprinted by kind permission of the pnbliaher. Ail Sights Reserved. 
















1 

f 


UK COMPANY NEWS 


Market shakes off figures on strength of maintained dividend 




Norcros down 37%: more job cuts 


By Jane Fuller 

NORCROS showed its 
vulnerability to the stresses in 
the UK handing and retailing 
sectors in the half year ended 
September 30, with operating 
profit on continuing b usines s 
down by 38 per cent to £17.75m, 
on turno ver 25 per cent ahead 
at £232 lm. 

Overall, group pre-tax profit 
fell 37 per cent to £18.32m 
(£29. 12m), on turnover off 35 
per cent at £2S3m (£356.74xn). 
reamings per share plummeted 
by nearly 5-8p to &3p. _ 

This was despite the first full 
six months’ Impact of swap- 
ping, with Meyer International, 
the poorly performing £7BM 
builders' merchant subsidiary 
for Crosby, a doors, windows 
a nd lrftnhens concern. 

As the disappointing figures 
were expected, the market was 
more impressed by the holding 
of the interim dividend at 5p, 
a*id the intention to do the 
same for the lip final. The 
share price rose 15p to 239 p on 
the prospect dad per cent 
yield. 

The workforce, however, had 
further disappointment to 
come. Mr Michael Doherty, 
rhtrf executive, said, about 400 
jobs, out of 10,000, were shed 
across the divisions. 

A «iwTtar number of redun- 
dancies were being imple- 
mented in the second half, 
nearly all at the ceramics fac- 
tories in Stoke on Trent The 
c eramics division showed flat 







-• 'if ,, 


W* 




Mirfiari Doherty, chief executive Of Norcros (teft) and Robert 
Alcocfc, finance director, putting on a brave face after announc- 
ing a 36% fall in interim profits. 


first half sales at £68.02m.but a 
42 per cent fall in opera ting 
profit to £5-351X1. Mr Doherty 
said the weakness was caused 
by the build up of fixed costs 
over several years. 

Job losses would continue 
next year, bringing the total 
cut to about 10 per cent 

Overall, the business dispos- 
als implemented by Mr Doh- 
erty since his appointment 20 


months ago brought turnover 


down by 35 per cent, despite a 
£40m contribution from the 
acquisitions. But opera- 
ting profit fell even more 
quickly. 

Taxable profit included 
nearly £600,000 in Interest 
received, against a £2-8Sm pay- 
ment last time. 

Together, building products 
and ceramics were split 


roughly equally between com- 
mercial and domestic work. Mr 

Doherty said the former was 
b olding up while the latter had 
been hit since the May rise in 
interest rates. 

The split was also 50/50 
between new build and refur- 
bishment and, unlike some 
managers In the sector, he said 
the businesses bad not experi- 
enced a flourishing of refur- 
bishment to replace the lost 
new build. 

Building products, which Is 
the largest division having 
absorbed Crosby, saw its turn- 
over increase by 68 per cent to 
£102. 62m, while operating 
profit grew 36 per cent to 
£8.76m. Three small factories 
were closed in the first halt 

The print and packaging 
division also saw operating 
profit fall, to £4. 73m (£&3m) on 
turnover slightly up at 
£46.48m. Mr Doherty said many 
of the packages and labels 
went to retailers, which had 
also bear under pressure. 

-Margins «hu remain more 
than io per cent, which the 
majority of sectors would be 
delighted with." 

The prop e r t y division, which 
contributed less than ctm com- 
pared with last year’s £8 .6m 
fincinding nearly £6m from the 
sale and leasebacks), was 
expected to do much better in 
the second half as develop- 
ments were sold. 

See Lex 




Greene King 
flat at £9.4m 


FINLAND 

The Financial Times proposes to pabBah a Surrey on (be above on 


MTU DECEMBER 1989 


For a fall editorial «j uo ps» and advertisement details, pteasc contact: 
OIKIS SCHAANN1NG OR GILUAN KING 


High interest 
rates hit 
Rowlinson 


oo 01-873 3428 or 4823 

or write to Ua/ker it 


EUamonkata t7A21 
flQMO HcWnfci, IMmA 
T«fc +358(0)046417 
Fas +358(0)4933213 


FINANCIAL TIMES 

(VMM * MWMIH UK »V«H« 


VENEZUELA 

The Financial limes proposes to publish a Survey on the above on 


13TH FEBRUARY 1990 


For a full editorial synopsis and advertisement details, please contact: 


Nigel Bicknell 


The adverse effects of high 
interest rates on property dis- 
posals resulted in a 26 per cent 
fall In inte rim pre-tax profits at 
Rowlinson Securities, the prop- 
erty development and invest- 
ment group. 

Although gross rental 
income improved slightly to 
£940,000 (£705,000), sales by the 
development and contracting 
divisions declined from £8A4m 
to £3-7Bm. Group pretax profits 
for the six months to Septem- 
ber 30 fell from £1.63m to 

£1 9m 

Tax took £421,000 (£569,000) 
after which earnings per lOp 
share were left at 637p (8.45p). 
The interim dividend is again 
24p. 

In spite of the adverse condi- 
tions the company was opti- 
mistic that Its financial 
strength and geographical 
spread would enable further 
growth in the second halt 


on 01-873 300 0 
or write to him at: 


Ulster Bank up 15% 


Number One, Southwark Bridge 
London S£1 9HL. 


FINANCIAL TIMES 

• luaon i wtMiii 


Ulster Investment Bank, the 
merchant banking subsidiary 
of Ulster Bank, part of 
National Westminster Bank 
group, announced after-tax 
profits for 1989 up 15 per cent 
to l£6.94m. Assets rose to 
I£1 .lbu d£873m). 


• COMMENT 

The slowing rate of pr o pert y 
disposals and rising interest 
charges are making them- 
selves evident at Greene King, 
offsetting good brew in g gates 
and prompting a fairly pedes- 
trian first-half performance. 
Both of these factors are set to 
continue and will be com- 
pounded by a more difRcnlt ; 
beer market as household 
expenditure is reined in. In the 
longer term, Greene King's ' 
strong brands make it a paten- , 
tlal beneficiary of the Govern- 
ment’s shake -up of ^ v* iudns- 1 
try. But even hoe, gains win ! 
depend on the to which 
the increased volumes of 
freely traded beers prompts 
price compe tition end reduced 
margins. AD of this suggests 
on fundamentals, a pro- 
spective multiple of Ju st ove r 
13 — proOtii I 

of £20m for the full year - Is 
too high. The suggestion is 
reinforced by the fact that 
Eiders IXL has been having 
difficulty finding a home fin- 
ite 13 per cent stake, reducing 
Die probability of a bid and 
raising the prospect of 
increased supply cm the mar- 
ket. 




FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


Cray reveals mbo 
made two months 


attempt 

ago 


By Nikki Taft 


GREENE KING & Sons, the 
East Anglian brewer, yester- 
day announced a marginal 
increase in pre-tax profits, 
from £9. 13m to £9.41m for the 
six months to October 29, 
writes John Ridding. 

Strong sales of its beers, 
which include Greene King 
IP A and Harp Lager helped lift 
trading profits by 21 per cent, 
from £6.9m to £8.36m. But 
increased interest payments of 
£461,000 (£32,000), resulting 
from the expansion in the 
group's capital expenditure, 
limited pr ogress at the pre-tax 
leveL 

Group turnover increased to 
£56.07m (£53.2 lm) and earn- 
ings per share edged ahead at 
15.7p (15.4p). The interim divi- 
dend is raised to 2£p (2.6p). 

During the period, Greene 
Ring continued with the reor- 
ganisation of its estate. It pur- 
chased nine new public houses 
and one site, three further 
pahs are under construction. , 

The group’s associate cam- , 
panics also expanded. Butter- 
fly Hotels opened a new hotel 1 
in Peterborough, and Big R 
Leisure opened a new bowling 
alley and a roller rink. 

Mr Bridge «»M that the com- 
pany had deferred a number of 
property disposals because at 
the depressed state of tile 
property market. As a result, 
property profits fell from 
£L73m to £l.lfim. 


AN ATTEMPT to mount a 
management buyout bid was 
made two months ago at Cray 
Electronics, the electronic 
equipment manufacturer 
which announced in November 
that a review of accounting 
policies had slashed previous- 
ly-stated profits by two-thirds, 
it was disclosed yesterday. 

However, the approach was 
rejected by the board, on the 
advice of the company’s advis- 
ers, and never notified to 
shareholders. 

The Information vu rftwpd at 
an extremely unhappy, if some- 
what resigned, extraordinary 
meeting of shareholders yester- 
day. This was called to approve 
an alternative reconstruction 
plan for the group, involving 
the injection of a new manage- 
ment team - comprising former 
UEI directors, Sir Peter Mich- 
ael, Mr Jeffrey Harrison and 
Mr Jon Richards - and the 
implementation of share sub- 
scription arrangements for the 
trio. These could give them 
over 20 per cent of Cray's 
equity. 

All motions were passed on a 
show of hands, with proxies 
also heavily in favour. The 
new board immediately beg an 
work, announcing - that they 
would review commitments 
and pay-afis to former direc- 
tors and fiiaf they planned to 
sell two divisions, including 
the defence interests. 

News of the mbo approach 
came in a question from Mr 
Les Kyle, m a nag i n g director of 
one of Cray’s more recently-ac- 
quired subsidiaries, who 
wanted to know why ft had not 
been put to shareholders. 

Mr Stephen Trudgill, the 
non-executive director who 
adopted the chairman’s role 
temporarily following the 
boardroom resignation of Mr 
Bernard Collins, said that 
directors had considered the 


Cray Electronics 


Share price (pence) 
300 



1967 1968 1989 


price offered insufficient After 
prompting from advisers, Mr 
Trudgill added that investiga- 
tions had showed there to be 
no serious financing behind 
tiie approach. 

An offer price around the 75p 
level Is believed to have been 
mooted by the buyout team, 
with Charterhouse acting as 
advisera. Funding was not in 
place, however, and would 
have been dependant on fur- 
ther information about Cray's 
financial position, which was 
never forthcoming. $. G. War- 
burg, Gray’s merchant bank- 
ers, said yesterday that their 
advice at the time was that 
funding was very unlikely, and 
that risks attached to proceed- 
ing with the offer were very 
high. 

Yesterday’s meeting - 
attended by some 200 people - 
began with a lengthy preamble 
from Mr Trudgill, during 
which he confirmed that the 
preliminary announcement - 


stating pre-tax profits to be 
£l7m in 1988/9 - was vetted by 
Ernst & Young, Gray's audi- 
tors. The review by Price 
Waterhouse later suggested 
that the figure should be 
£5.44m. 

Attempting to difftwa share- 


holder unrest, Mr Trudgill 
announced that the buy-in 
mpm had said it would review 
the arrangements with former 
directors "as a matter of prior- 
ity”. 

Mr Collins, the group’s for- 
mer chief executive as well as 
chair man, was given a fixed- 
term service contract in 
August worth £225.000 a year 
until July 1999. white Cray’s 
former finance director 
received a £125,000 pay-off with 
another £40,000 to augment his 
pension. “ 

That did not stop several for- 
mer employees and vendors of 
businesses to Cray expressing 
their horror at the auuation. 
‘Directors leaving Cray’s sink- 
ing ship have not only been 
well-provided for, but seem to 
have taken the life-boats as ’ 
well,’* commented Mr David 
Hopkins, to - general 
applause. 

p os tel. the fond managers 
for the large British Telecom 
and Post Office pension funds, 
also registered their unhappi- 
ness at the extent of the share 
subscription arrangements 
offered to the new manage- 
ment. It said that It would not 
vote against in the absence on • 
any alternative, but expected 
"extraordinary rewards" In 
return for the "extraordinary 
Incentives” 

After meeting; a number of 
people who had sold companies 
to Cray recently were talking 
about taking legal advice, 
although Sir Peter said that no 
moves . had been registered 
with the company Itself. 

The new team announced 
later that ft was immediately 
putting the defence division, 
with broke even on sates of 
£21m last year, up for sale, 
together with the loss-making 
Cray Advanced Materials sub- 
sidiary. It also plana to shed 
the divisional structure of the 
head office. 


Monotype losses increase to 
over £1.3m in first six months 


By John Ridding 


MONOTYPE CORPORATION, 
the manufacturer of typeset- 
ting equipment, which has 
agreed a 522m takeover by a 
US investment company but 
which has subsequently 
attracted the interest of Mr 
Robert Maxwell’s Mirror Group 
Newspapers, -' -. yesterday 
: announced higher pre-tax 
fosses for the first halt 
The deficit for the six 
months to the end of Septem- 
ber rose from £908,000 to 
£1.29m on sales down from 
£22.6Im to £21 -13m. Losses per 
share were reduced from 6J21p 
to 5.7lp, reflecting an increased 
number of shares in issue, and 
the interim dividend has been 


Mr Roger Day, chairman, 
said that the reason for the 
downturn was the sale of Cbri- 
graph Products, a profitable 
business but which Monotype 
frit had readied a "technical 
plateau”. In addition, the 
group’s, borrowings, which now 
amount to about £i7m, 
prompted a rise in the interest 
charge from £471,000 to 
£748^00. ... 

According to Mr Day. the 
underlying trading position 
improved during the period 

and marg ins an d vol ume s had 

recovered in the September 
quarter. 

Monotype also announced 


yestenlay that property revalu- 
ations, including the group's 
new headquarters building, 
had yielded a surplus of 
£4.41m. 


The offer document from 
Pctfntplns, the vehicle for King 
Black & Associates, the US 
investment company, was sent 
to shareholders yesterday. But 
Mirror Group Newspapers has 
indi ca t ed that it may a 
bid at a price slightly higher 
than the I50p pm- share offer 
from Pointplus. Yesterday the 
shares were unchanged at 
155p- 


Record interim results 


for six months to 30th September (unaudited) 



TURNOVER (£ million) 


1989 1988 

3,664 3,075 UP 19% 


Strong growth in sales, pre-tax profit and 
earnings per share 


Outstanding order book at &8 billion 


PROFIT BEFORE TAX (& million) 357 


313 UP 14% 


Joint ventures with CGE and 6E 
successfully completed 


EARNINGS PER SHARE (pence) 


7.5 UP 14% 


Plessey acquired by GEC Siemens 


DIVIDENDS PER SHARE (pence) 2.55 2.15 UP 19% 


Further substantial increase in dividend 




The General Electric Company, p J.c. 

1 Stanhope Gate, London W1A 1EH. 


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FINANCIAL* TIMES THURSDAY DECEMBER 7 1989 


UK COMPANY NEWS 


Uncertainty from bid overshadows strong trading performance 

Tiphook doubles to £10. lm 


By Andrew HH1 

TIPHOOK, tiie UK container 
rental company Involved in a 
long-running $i.02bn bid for 
Sea Containers, note than dou- 
bled pretax profits to £UMm in 
the half-year to October 31, 
against £i5m last time. 

Mr Robert Montague, chair- 
man, said the economic cli- 
mate bad not bad an adverse 
effect on the core business in 
the first halt thanks to strong' 
financial controls- Also, cus- 
tomers were renting, rather 
than buying trailers and con- 
tainers, due to economic imcer- 


He could not comment on 
the bid "because the UK group' 
and its Swedish partner Stena, 
a private shipping company, 
are currently fighting a legal 
battle with Sea Containers hi 
Bermuda, where tire fe rry 
container group is registered. 

Tiphook’s turnover rose 
from £45Jm to £74JSm and 
earnings per share were, up 
from 12Sp to I9.6p- An interim 
dividend of 2.7p (2*15p) was 
declared. 

Mr Rodger Braidwood, 
finance director, said he 
thought the Sea Containers bid 



100 


1986 1987 


had overshadowed Tiphook’s 
strung trading uezfozioance- 
In Bermuda, Tiphook and 
Stena are trying to win an 
injunction which would pre- 
vent Sea Containers from deal- 
ing in its own shares, fallowing 
a setback at the beginning of 
last week, when Bermuda’s 
chief justice ruled that the pur- 
chase of shares by Sea Contain- 
ers subsidiaries was legaL The 
judge could decide whether to 
allow an injunction by the end 


Robert Montague: 

finanrj flT ^ ff n l r o lB 


strong 


of this week. 

Sea Containers is planning 
to dispose of $Llbn of assets, 
to fund a $70-a-share tender 
offer for its own shares, to 
fight off the $63-a-share offer. 

Mr James Sherwood, Sea 
Containers' president, has yet 
to set a date for a special meet- 
ing at which investors would 
consider fin* alternatives. 

• COMMENT 

Strip out the risk involved in 


the Sea Containers bid and 
Tiphook’s shares look rather 
attractive. Trading is strong 
and even if recession bites in 
the UK, the group is probably 
sheltered by its well-spread 
international business. Ana- 
lysts are forecasting pre-tax 
profits year of as much as 
£35m - a prospective p/e of 
about 8 on yesterday’s closing 
price of 442p, up 8p, compared 
with 5X2p when the offer was 
launched. However. * bids 
fought in Bermuda, London 
and New York over more than 
six months must take their 
tolL Tiphook’s shares rose 
after last week's unfavourable 
court decision, which dispelled 
some investors' concerns about 
what might happen to 
Tiphook’s finances if the bid 
were successful. On the other 
hand, the strength of the first- 
half performance indicates that 
mawagiwnant might well be Up 
to that sort of challenge. The 
downside should be limited — 
rights issues are already in 
place to fund a part of the Sea 
Containers bid - but cautious 
investors might prefer to wait 
and see. 


Reorganised BTP 41% ahead 
and benefits from disposal 


By Vanessa Houdder 

BTP, the specialist chemical 
and industrial group, yesterday 
announced a- 41 per cent 
increase in profits before tax 
and exceptional 'items from 
£4-61m to £&51m for tiie six 
months to September 30. 

An exceptional profit of 
£3 i m from the group's sale of 
its 50 per cent holding in 
Desoto Tt tonlne. a specialist 
coating manufacturer, lifted 
the pre-tax total to £9. 6m. 
Turnover was £60. 12m 
(£44.77m). ' 

Mr Frank-BurMey, chairman 
and rhirf mr mufi u H, said that 

the results hi g hli g hted the-ben- 
efits of the reinvestment and 
refocusing strategy- of the past 
and current financial year. 

The operating profit of the 
chemical division increased 
from £3-18m to £&28m while 
that of foe industrial division 
rose from £L49m to £L83m- 


Mr Robert Martin, finance 
director, that the chemi- 
cals arid industrial division 
had produced organic growth 
of 30 per cent and 20 per cent 
respectively. 

The gearing is under 2 0 per 
cent More moves taking FTP 
further rntn specialist chemi- 
cals and reducing its depen- 
dence an the UK, are being 
considere d. «awi Mr Martin. 

Earnings per share were 6Bp 
(excluding exceptional items) 
against ;4J&p, an increase of 38 
per r*mtL All inter im dividend 
of 2.75p (2.5p) has been 
declared. 

• COMMENT 

BTP*s metamorphosis from the 
bulk storage and chemicals 
company British Tar Products 
has, it might seem, been vindi- 
cated. These results, which 
were at the top mid of expecta- 


tions, demonstrate the heneflta 
of its move into specialist 
ntehoq The rhemieals, which 
range from brewing products 
to textiles Wntehinga (which 
have been boosted by legisla- 
tion on flame retardants), have 
so far shown little sign of a 
downturn and promise to 
steam ahead for several years 
to come. Even the industrial 
division, which has been 
reduced in size, has generally 
held up welL However, the 
company has a slightly che- 
quered image in the City and 
the thinly-traded shares have 
underperformed this year. 
Assuming it makes profits 
before exceptional items of 
o 3.3m this year, tiie shares up 
3p to I37p are cm a rating of 9. 
Taken together with a gener- 
ous prospective yield of 7.5, 
the shares offer respectable 
value. 


Perkins Foods to pay up to £19.4m for 
West jeraip frozen pizza maker 

By Andrew Bolder 


PERKINS FOODS, the 
fast-growing food manufac- 
turer and distributor, has 
agreed to pay up to £19.<m 
for Peppino’s Pizzas, a West 
German maker of frozen 

pWTM. 

Perkins, the former John 
Perkins Meats which Is quoted 
on the USM, plans to raise 
£l&Sm by a placing mid open 
offer of 20.8m shares at 92p 
each. On the stock market its 
shares dropped 8P to match 
that price. 

The company also said it 
was in negotiation with the 
proprietors of two small 
European food businesses and 
hoped to acquire them fra: a 
maximu m £&5m in the near 
future. 

The Peppino’s acquisition, 
Perkins first in West Germany, 
was a far ther step in the cre- 
ation of a broadly based North- 


ern European food group. 

The group has three core 
activities - fr oz e n food manu- 
facturing and trading; market- 
ing and distribution of fresh 
produce; and mushroom pro- 
cessing and distribution. 

Mr Ho ward Phili ps, c hief 
executive, said that after this 
acquisition 70 per cent of Per- 
kins’ profits would come from 
the Netherlands, 20 per cent 
from West Germany, and the 
remainder from the UK. 

Feppino’s supplies a range of 
frozen, thin-base pizzas to 
south German supermarket 
nhnfag and also supplies one of 
Hw national bnmn delivery ser- 
vices. 

Initial Hirmiitaratkip for pep- 
pino’s is £UL3m on w arra nte d 
profits of £L7m for 1989. 
The maxim um deferred consid- 
eration, subject to profits, 
is £7JLm, payable over four 


years. 

To raise frauds for the acqui- 
sition, 20.8m new ordinary 
shares are being conditionally 
placed by Guinness Mahon 
with institutional clients of 
James Capel. subject to recall 
to satisfy applications under 
the open offer. 

Shareholders can apply for 
those at 92p each on the basis 
of one now for every four ordi- 
nary held; one for every four 
sterling convertible preference 
shares; and one for every 16 
Deutsche Mark convertible 
preference shares. 

Funds raised in excess of the 
cash consideration for the 
acquisition will be used ini- 
tially to reduce Perkins* level 
of gearing. Perkins forecast 
that its final dividend for the 
year to December 81 would be 
at least 3.1p (2 l5p), an increase 
of 24 per cent 


XHPJRICT-QM 

PHILlPPmES lREDEYELQPMENT FUND 

LIMITER 

After the closing of the stock exchanges in the 
Philippines, the Directors of Thornton Philippines 
Redevelopment Fund Limited, having been advised by 
the Managers, have suspended dealing in shares of 
the aforesaid Fund until farther notice. 

It is intended to make a further announcement 
when dealing can re-commence. 



THORNTON 


PROFITING FROM LOCAL KNOWLEDGE 


PUBLIC WORKS LOAN BOARD RATES 


Over 1 up to 2 — 
Over 2 up to 3 — 
Over S up to 4 — 
Over 4 up to 5 — 
Over 5 up to 8 — . 
Over 6 Up to 7 


wort 

an 

13% 

13% 

13 

12% 

ttja. 

12% 

12H 

12 b 

12 

11% 

11% 

n% 

11% 

n% 

.11^ 

11% 

11^ 

n 1 * 

11% 

. ii 

10% 

i03a 

103b 

10% 


14% 
12 % 
12 % 
11* 
ii s* 
11 % 




Over 7 up to 8 

Over 6 up to 9 — 

Over 9 up to 10 

Over 10 up to 15 — ~. 

Over 15 up to 25 

Over 25 

“Mon-quote loans B are 1 per cent higher hi each case than non-quota 
loans A_ lequal instalments of -principal. IT Repayment by half-yearly 
annuity (fixed equal half-yearly payments to include principal and 
interest). § With halfywuly payments of Interest only. 


105a 

101 * 

iota 


k, Hft 

■ ri*H 




14% 

14% 

14 ^ 

13% 

14 

13% 

12% 

•13% 

13% 

12% 

13% 

13% 

12% 

12% 

12% 

12 

12% 

12% 

12 

12% 

12% 

11% 

12% 

12% 

H% 

123g 

12 

11% 

11% 

11% 

11% 

11% 

11 

10% 

10% 

10% 

10% 




Weekly net asset 

value 


Tokyo Pacific Hokfinga 
(Seaboard) NX 

as at 4-12 whs USJ 212.09 

Listed on the Amsterdam 
Stock Exchange 
Information: 

Pteraon, Hcldring & P person N.V. 
Roldn 55, t0l2 JGC Amsterdam. 
TeL + 31-20-5211188. 


Spurs’ team 
rides oyer 
investors’ 
tackles 

By John Ridding 


TOTTENHAM HOTSPUR'S 
annual meeting, billed as a 
needle match between a 
divided board and a crowd of 
angry shareholders, proved in 
the event a relatively easy fix- 
ture for Mr Paul Bobroff, the 
company's rfhatemaw 
However, the defending 
team of Mr Bobroff and hi* 

colleagues on the board did 
have to field a number of awk- 
ward questions. 

“Why did yon step down 
as chairman only to come 
bade one week later?” asked 
Mr Hamilton-Fairley, who 
added that “we find these 
boardroom shenanigans dis- 
concerting.** 

“Why are costs np by 50 per 
cent, administration expenses 
up by 80 per cent and profits 
down by half?” demanded Mr 
Darbisbire who believed 
that last year’s results were 
“not a tribute to good manage- 
ment" 

But Mr Bobnoff and Ms 
board handled the objections 
with relative ease. The 
reported split between himself 
and Mr Tony Berry, former 
chairman of Blue Arrow and a 
fellow Tottenham director 
with about 8 per cent of the 
shares and Mr Irving Scholar, 
the football dab chairman, 
failed to manifest itself. 

Similarly, shareholder dis- 
content about the level of the 
dub's indebtedness -and 
reports that this would limit 
Sinzrs* activity cm the transfer 
market, was limited to grum- 
bles about the departure of 
Chris Waddle, the talented 
striker, to Marseille for a 
record SAJSm. 

Mr Bobroff admitted that 
borrowings at Spurs - the 
only UK football team with a 
full market listing — had 
from the £7J5m reported In the 
accounts for 1989. He declined 
to specify the current level, 
estimated at up to £l0m, but 
said that the company’s finan- 
cial position had been 
much as expected since the 
«md of May. 

In respect of his abrupt 
departure and reinstatement 
at the head of the group, Mr 
Bobroff said that “the board 
has an agreed policy and strat- 
egy” and that “any concerns 
on the part of shareholders 
will be allayed over the next 
few month.s.” 

But before long, attention 
was focused on football, the 
main interest of most of those 
present - even though the 
questions retained a financial 
ring. “What” asked Mr Gra- 
ham Betts, “is the condition of 
our asset who broke his leg at 
Mandiwiw United?** 


Bogod profits 
hit by French 
operation 

Pre-tax profits of Bogod 

Group, formerly Bogod-Pele- 
pah, winw of sewing machines 
and parts, were halved to 
£45,000 In the six months 
ended September 30, 
1989. 

This was after a £63,000 
debit, taken as an exceptional 
charge, for the setting up and 
tite trading losses of Bogod 
France. 

Turnover rose slightly, from 
£3. 05m to £3.25m. Taxable 
profits last time were 
£98,000. 

Bantings worked through at 
0>0636p (0.6005p) pa ordinary 
lOp share and 0-1272p (l-201p) 
per ‘A* restric te d voting share. 
The Interim dividend is held at 
(Up. 

Directors said it would still 
take some time for the Bogod 
France operation to make a 
positive cuniribntion to group 


29 


September 1989 


A 


ASTRA HOLDINGS PLC 


has acquired 


PRB s.a. 


from 


Gechem 


a company in the 


Societe Generate de Belgique Group 


We initiated this transaction, assisted in the negotiations 
and acted as financial advisor to Astra Holdings PLC. 


PalneWebber International 


nurfcct 

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SO.-- 
t CiJC.T 


i’-*n c’f 

ir 

: .iio.*! 


waai 

L 

P SLv 

.p 

if 
r .jf 


...the pace 
of our progress has 
gathered speed... 



CHRISTOPHER HARDING. CHAIRMAN. 

* 6 j It was a year of growth, with turnover up by 
£77 M to £916M and operating profits showing 
an increase of some 16% at £275M. V 

66 Profit before tax was £24M higher at £124M. n 

u ffe set a new record for export sales, which 
rose by 26% to £169MP 


heme spent heavily on cleaning up our 
environmental act ahead of the game. Our com- 
petitors in the energy business will now have to 
do the same?* 

44 While calling for a pause in nuclear devel- 
opment, the government has recognised the 
importance of nuclear’s contribution to diversity of 
supply and thus of retaining the option for a long- 
term amtrrbzdum from economic nuclear power?* . 

^IVe have the technology, 
we have the skills, we have / 
the people and we have the • v 
determination to succeed?* £*.- 







1989 

1988 


CM 

£M 

TURNOVER 

916 

839 

EXPORTS 

169 

134 

.PROFIT BEFORETAX 

124 

100 

PROFIT AFTERTAX 

107 

84 

DIVIDEND . 

40 

36 

CAPITAL EXPENDITURE 

647 

584 

ASSETS 

3117 

2588 

NUMBER OF EMPLOYEES (AVERAGE) 16.169 

16,773 


I Send for yoor free copy of oar 

Annual Report and Accounts to: British Nuclear Fuels pic. 
Information Services. Rialey, Warrington, Cheshire WA3 6 AS. 

NAME 


aodress. 


L. 


BNFL 


.J 







1 

r 




FINANCIAL TIMES THURSDAY DECEMBER T 1989 


Dividend up despite profits decline to £12. 18m 

Poor tyre sales blamed for 
downturn at Avon Rubber 


By Clare Pearson 


PRE-TAX profits of Avon 
Rubber, the tyres and indus- 
trial polymers and in Qa tables 
concern, fell from £l<L27m to 
£12. 18m in the year to end-Sep- 
tember. 

The company had earlier 
warned City analysts that 
adverse conditions arising 
from poor sales of replacement 
tyres at home, and of winter 
tyres in Continental Europe, 
had affected it during the 
period under review. 

Infla tables too had a bad 
year, which was largely 
ascribed to a downturn in 
the US marine products mar- 

But the final dividend is 
upped to 11.5p (lOp), making 
l&5p (14p) for the year. Earn- 
ings per share, adjusted for a 
one-for-fonr rights issue in 
June, fell to 41p (65.4p). 

Mr Tony Mitchard, chief 
executive, said he expected 
Avon to make progress in the 
current year. But uncertainties 
over the US car market, the 
UK economy, and the winter 
weather made the extent of 
progress very difficult to proj- 
ect 

This summer Avon took two 
measures to reduce the propor- 
tion of its business taken up by 
tyre production: in May it sold 


- for £l&5m - 70 per emit of 
Motorway, the UK retail opera- 
tion. to SP Tyres, the Sumi- 
tomo Rubber Industries subsid- 
iary, and the next month it 
announced the £38m purchase 
of Cadillac, a US rubber and 
plastics group. 

But since the purchase, 
Cadillac has been bit by sharp 
cutbacks in activity within the 
US motor manufacturing 
industry which has seen a 
19 per cent fall in production 
of passenger cars in the last 
quarter. 

Borrowings to finance the 
Cadillac purchase, the cost of 
carrying tyre stocks, and 
higher interest rates contrib- 
uted to a rise in interest pay- 
able to £4.68m (£2. 64m). 

Operating losses at Motor- 
way amounted to £900,000 in 
the period to May, against a 
£607.000 in 1988. Since May, it 
has pot in a £280,000 loss to the 
£105,000 (£227,000) profit from 
related companies. 

Despite low overseas sales of 
its 510 respirator, the indus- 
trial polymers activities matin 
£l<X27m (£9.42m) at the operat- 
ing line. Inflatables put In 
£474,000 (£1.0Sm). Tyres at 
)innw» apri overseas madn B» 1m 

(£7. 29m). Turnover .was 
£228S8m (£226£6m) 


Construction equipment 
helps lift Robert Douglas 
by 41% to over £5m 

By Andrew Taylor, Construction Correspondent 


PRE-TAX profits of Robert M 
Douglas, the building, civil 
engineering and construction 
equipment group, increased by 
41 per cent, fiom £3.72m to 
KL23m, during the six months 
to the end of September.The 
shares closeds 8p higher at 
428p. 

Profits from construction 
equipment, which accounted 
for just under half of profits, 
almost doubled. This mainly 
reflected strong demand for 
scaffolding and form work. The 
increase in profits from plant 
hire was more disappointing 
because of a fall in UK house- 
building, said Mr John Doug- 
las. chairman . 

The group bad only a small 
housebuilding business. There- 
fore it had been less exposed to 
the decline in this market than 
other construction gronps 
which had much bigger house- 
building operations. 

Mr Douglas said there bad 


been some signs that private 
sector retail and office develop- 
ment in London and toe south 
east were beginning to decline. 
The office mid industrial mar- 
kets in fiie Midlands, where 
the group was well placed, 
however, remained strong. 

Value of the group’s order 
book had risen to £316m by the 
end of Se ptem ber compared 
with about £260m at the begin- 
ning .of the year. The settle- 
ment of several rfahna would 
boost construction profits in 
the second baff 

Mr Douglas said that 
increased investment in r oads 
and the water industry would 
underpin order books during 
the first half of the 1990s. 

Turnover in the six months 
increased from £ 129.38m to 
£16L17m. Earnings per share 
rose by 37.7 per cent to 20.8p 
(15.1p) and the interim divi-- 
dead is lifted from 2p to 3p. 


(15.1p) and the interim di 
dead is lifted from 2p to 3p. 


UK COMPANY MEWS 

Grown in ongoing 
activities lifts 
Cape by 33% 


Second half downturn leaves 
Crystalate 49% lower at £3m 


• comment 

This latest spate of bad news 
left Avon Rubber’s shares, now 
down to around 425p agains t a 
rights issue price of 500p, virtu- 
ally unmoved. On a historic p/e 
of about 103, they stin tower 
over their sector - which 
seems hard to justify especially 
considering the darker than 
recently expected environment 
for Cadillac, and Motorway’s 
continuing problems. However, 
hearing tu mind Avon’s hand 
of loyal supporters, analysts 
yesterday thought the shares 
were likely to drift near-term 
rather than slump. Current 
year pre-tax profits of about 
£17m were pencilled in, giving 
a prospective p/e above 9; but 
much depends on wbat hap- 
pens to US car production, as 
well as how much snow we get 
in the coming months. All will 
be dearer by early spring. The 
mmpmy still baa a number of 
very positive aspects: transfers 
of technology between Cadil- 
lac, which it aims to develop 
away from tbe automotive 
market for and its European 
business, for instance, and the 
benefits from a weaker pound 
arising from its rapid enhance- 
ment of non-UK business in 
recent years. 


Whessoe up 
but turnover 
tumbles 41% 

WHESSOE, the pipework 
fabricator and engineer, yester- 
day reported a 35 per cent 
increase in pre-tax profits fiom 
a 41 per cent reduction in turn- 
over. 

The profits figure of £4.78m 
compared with £3.55m last 
time and comprised £4.0 lm 
(£3 -07m) from en ginpgring and 
£777,000 (£480,000) from instru- 
mentation and control. 

This result was struck on 
turnover of £58.44m (£99.6m) 
and reflected the dowtnm in 
its heavy engineering division. 

Whessoe announced in July 
that it planned to close its 
worksho ps^ in Darlington, 
County Durham, where it was 
ex periencing difficulty In find- 
ing sufficient work to meet its 
capacity. 

The company said that the 
prevailing economic circum- 
stances in the UK were not as 
favourable as it would wish 
and its new management team 
was faced with considerable 
dmilengps- 

Tfce beard believed, however. 


DOUGLAS 


By Andrew Bulger 

CAFE, the fire protection, 
insulation and building prod- 
ucts group, yesterday 
announced a 33 per cent 
increase in pre-tax profits to 
£8.4m in the half year to Sep- 
tember 30. 

Cape, a former asbestos 
maker which is 6&B per cent 
owned by Chartered Consoli- 
dated, said turnover had 
increased by 11.5 per cent to 
£ 9 G. 4 zzl 

Mr Jeffery Herbert, chair- 
man, said both the building 
products and industrial ser- 
vices division had contributed 
to this performance, which was 
achieved in spite of uncertain- 
ties being reflected in the mar- 
ket towards the end of the six- 
month period. 

Shareholders' funds stood at 
«asm (£542m). Net cash bal- 
ances at September 30 totalled 

£14. 4m. 

Mr Herbert said the recently 
announced decision to close 
the manufacturing operations 
of Cape Uni-Chem In Bowbura, 
County Durham, would end 
Cape’s involvement with the 
manufacture and sale of any 
asbestos products. The plant, 
which bad been operating on a 
breakeven basis, would close 
early in 1990. 

Another chapter was closed 
in October when the House of 
Lords refused to hear an 
appeal on behalf of 206 people 
in Texas who, supported by the 


that the group was more 
robust as a result of the 
actions taken and was now bet- 
ter able to take advantage of 
the opportunities open to it. 

After tax of£L5fim (£393,000), 
earnings per share were left 
unchanged at 17.5p, and the 
directors propose to pay an 
improved final dividend of 
3»75p (3p) making a total for 
the year of 5p (4p). 

Interest rates halve 
profits at Caffyns 

Despite a rise in turnover from 
£66. 46m to £69.62m, profits 
were more than halved at Caf- 
fyns, tbe Sussex-based motor 
dealer, in the six months to 
September 30. The decline, 
from £l-5m to £652.000, had 
been warned of in June and 
was attributed by the directors 
to pressure on margins and 
higher interest rates. 

The problems are expected 
to continue this winter, but the 
directors are hopeful that by 
the middle of next year an 
upturn will be seen. 

An exceptional credit of 
£407,000 (£380,000) was the sur- 
plus on the disposal of proper- 
ties minus the cost of rational- 
isation. The Interim dividend is 
maintained at 5p from earnings 
per share of 162p (42JpX 

J Latham down hot 
increases dividend 

A mixed second quarter led to 
James Latham showing a 
redaction in profit, from 
£L85m to £L58m. for the half 


US Government, had claimed j 
$15 -5m from Cape and a subsid- 
iary over asbestos-related inju- 
ries. 

Cape also no longer has any 
South African interests follow- 
ing the disposal in October of 
Cape Contracts, its wholly- 
owned South African contract- 
ing subsidiary. 

Mr Herbert said high interest 
rates were inevitably having 
an impact on certain of Cape’s 
UK markets and tha medium- 
term outlook remained 
unclear. However, he was con- 
fident about the future in view 
of Cape’s current cash 
resources, the end of the asbes- 
tos case litigation and the 
group’s emphasis on expats. 

Earnings rose to 132p 
(10-3p). An interim dividend of 
2.5p (2p) was declared. 

Hardanger Props 
lifted to £8.4m 

Hardanger Properties, the 
Worcester-based property 
developer, lifted pre-tax profits 
by 19 per cent from £7.05m to 
£827m in the year to Septem- 
ber 30. 

Turnover slipped from 
£27 .57m to £2621m, though 
earnings were up 29 per cent to 
868p (66. Sp). The final dividend 
is increased 32£ per cent to a 
recommended 19275p to maho 
28 J25p for tiie year. 


SECOND-HALF ' profits at 
Crystalate Holdings reached 
only £618,000, and left the full 
year showing a 49 per cent 
reduction. Tbe final dividend, 
however, is being maintained. 

Lord Jenkin, chairman of 
fills electronic products maker, 
said the result was a serious 
disappointment and manage- 
ment was taking action to cut 
costs and restructure as appro- 
priate. 

“We have taken major action 
to respond to current market 
trends; we are continuing to 
invest in advanced manufac- 
turing- equipment and facili- 
ties”, he stated. 

The share price had already 
suffered after the group issued 
a profits warning last August 
Yesterday, however, it rose lOp 
to 62p as the result was not as 
bad as the market feared. 

Turnover for the year ended 
September 30 was only margin- 
ally lower at £1 14.72m 
(£1 17.96m) but the pre-tax 
profit foil to £2 91m (£5.68m). 

Return from resistive prodr 


acts in the US and Barbados 
dived 32 per cent and the 

systems side showed a £1.67m 
downturn Into loss; that was 
exacerbated by * near doubling 
to £1.64m fa interest charges. 

Net borrowings had doubled 
to £24m by the year-end ana 
compared with shareholders 
funds of £20m. 

Lord Jenkin said the 
increase was partly to finance 
a significant . capital invest- 
ment programme in the UK 
and US, and partly to finance 
greater than anticipated work- 
ing capital. 

He explained, however, that 
there would be a si gnif i can t 
reduction in borrowing as the 
group had decided to sell Bes- 
son and CGCEE, and also 
planned to reduce working cap- 
itaL 

Besson is the troubled tele- 
communications division, and 
its problems intensified in the 
first half as orders from some 
major customers fell away. 

Detailed negotiations were 
proceeding for its sale. COCOS 


is the French operation; it was 
profitable as a manufacturer 
and refurbisher of military and 
civil telecommunications 
equipment, but did not fit well 
with the rest of tbe businesses. 

On prospects Lord Jenkin 
said over 50 per cent erf busi- 
ness was in resistive products 
where the group had high mar- 
ket shares, a strong order book 
and, in the main, good mar- 


Cost redaction programmes 
should make further progress. 

Altho ugh systems had a had 
year, contract assembly waa a 
growth market A more satis- 
factory performance was 
expected in tbe current year. 

After extraordinary charges 
of £5.97m (£2.49m), including 
reorganisation costs and losses 
on businesses for sale, there 
was a loss for the year of £3.7ra 
(profit £L79m). Given that this 
was due to extraordinary pro- 
vision and given the prospects 
of reduced borrowing, the final 
dividend is again 3JJp, which 
makes the total 6-lp (6p). 


Leopold Joseph warns on profits 


By David Lasceltes, Banking Editor 


LEOPOLD JOSEPH, the 
merchant banking group, 
warned yesterday that profits 
in its current financial year 
might not match last year’s 
because of the worsening eco- 
nomic scene and rising costs. 

In its interim statement yes- 
terday, tiie bank said t hat net 


NEWS DIGEST 


year ended Sep t ember 30. 

This timber importer, mer- 
chant and veneer panel maker 
had shown record figures in 
the opening three months. 

Turnover in the baff year 
moved up to £31A5m (£29.64m), 
but trading profit was little 
changed at £2.44m (£2 -39m). 
Earnings dropped to 19.96$ 
(23.3ip), but the interim divi- 
dend is raised to 4-25p (4p). 
Profit in the 1988 included 
£147,000 surplus on land dis- 

Noteworthy performances 
were achieved by the north- 
ern-based companies and there 
had been a positive return on 
profitability by Richard Graefe. 

Embassy Property 
vaults to £0.85iii 

All-round growth helped pre- 
tax profits vault from £247,000 
to £854,000 at USM-quotod 
Embassy Property Group in 
thi> bit months to September 
30. Turnover rose by a more 
modest 30 per cent from £7-09m 
to £9J8m. 

Within the profit figure, 
property development and 
trading advanced to £377,000 
(£193,000); residential develop- 
ment to £152,000 (£67,000); con- 
struction and shopfitting to 
£279,000 (£122,000); and prop- 
erty investment to £201,000 
(loses £1,000). 

After tax of £307,000 
(£89,000). earnings per share 
were 7.1p (nil) at the basic 
level and 6.9p (nil) fully 
diluted. The maiden interim 
dividend is 2p. 


profits for the half year to Sep- 
tember 30 were “comparable* 
with those of tbe previous 
year. The group bad also 
attracted new customers and 
increased revenues. 

But there had been “addi- 
tional costs due to our estab- 
lished policy of laying secure 


foundations for future growth. 
In consequence, the outcome 
for disclosed profits for the fall 
year may not repeat the prog- 
ress of recent years.” Last 
year, net profits rose 43 per 
cent to £2m. 

The unchanged interim divi- 
dend of 3,ip will cost E162J&7S. 


Mr Roger Holbeche, chair- 
man, said that, while the gen- 
eral economic situation was 
having an effect on certain at 
tiie group’s activities, the ded-’ 
sion earlier in the year to capi- 
talise the majority of its gen- 
eral borrowing rates, together 
with the spread of activities, 
would help protect the group’s 
performance in tbe coming 

rmwitha 

Nortiuunber hit by 
market conditions 

Northamber, a supplier of com- 
puters, computer printers and 
peripheral products, increased 
its t u r n over by 1&2 per cent 
from £47-88m to £54.22m in the 
half year to October 31. But 
high interest rates and the 
decision to concentrate 
resources on customers with a 
quality credit rating with tbe 
resultant lower margins, left 
pre-tax pr o fi t s down by 2lj per 
cent to £2J5m against £2.72m. 

Mr David Phillips, the chair- 
man, said in the first quarter 
the cost oontrols and continu- 
ing efficiency measures that 
had been introduced over the 
past year negated the effects of 
slower markets, but during the 
second quarter, the figures 
were finally eroded by the fur- 
ther worsening of market con- 
ditions. 

Operating profits for the 
period fefi to £2.64m (£322m) 
and interest payments were lit- 
tle changed at £491,000 
(£495#»).After tax of £721,000 
(£909,000) earnings per share 
emerged at 8p (10.3p). Net 


assets per share were 107p long: 
compared with 89£p and 9&5p high, 
at the April 30 year end. Nei 


as interest rates remained 


All-round growth at 
Cranswick Mill 

All aspects of the Cranswick 
Mill Group performed well in 
the half year ended September 
30, and .profits rose from! 
£315,000 to £434,000. 

T ur no v er of this USM-quoted 
pig feed and marketing group' 
was ahead £3m to £31m. Earn- 
ings rose to 4A» (3Jp) but the 
interim dividend is l.flSp, 

Mr Richard Marglnson, 
chairman, said results of the 
feed division were pleasing, 
with market share being main- 
tained. 

Albion op 24% bat 
remains cautions 

Albion, manufacturer and 
retailer of tailored menswear. 
recorded a 24.4 per cent 
increase from £764,000 to 
£951^)00 in pre-tax profits for 
the year to September 30 on 
turnover which rose from 
£9.69m to £lL6Sm. 

The statement had a caution- 
ary tail, however. The board 
stated that there was now 
increased evidence that the 
Government's anti-inflation 
measures were curbing con- 
sumer spending. 

This had resulted in a short- 
ened order book and competi- 
tion for new business had 
become intense. Pressure on 
margins would continue so 


Net operating income hut 
year waa up from SSS&JOOO to 
£804,000 but other income 
Slipped to £189,000 (1226,000). 
The share of leases of an asso- 
ciated company amounted to 
£43,000 foil}- Tax charged was 
£304,000 (£228,000) and there 
was a debitof £70,000 (£82,000) 
for minorttexand an extraordi- 
nary charge of £15,000 (£50,000 
income). 

Earnings per share were 
15-4p (UUp) lor the dividend 
total which, with' a p roposed 
final of UBp, is 3Jp (2.4p). 


Mopk$ & Crane . 
falls sharply 

Profits foil sharply at Monks & 
Crane, USM-quoted distributor 
of industrial tools and fixing?. 
In the six months to September 
30, The taxable result, of 
£824^)00 compared with £L22m 
la the previous first half. 

Turnover rose slightly from 
£23. 18m to £23.74m. hut the 
share of profit from associated 
company’s fell to £32,000 
<£80JMXD and net interest pay- 
able jumped to £397,000 
(£110,000). 

The directors expect trading 
to improve during the second 
half as measures have been 
taken to reduce overheads and 
achieve higher margins. 

In tiie first half an excep- 
tional loss of £122,000 (nil) 
arose from the closure of 
brandies. The interim dividend 
is helda*.L3p on earnings per 
share of Z7p (4.6p). 


SIGNIFICANT INCREASES 
IN PRE-TAX PROFITS AND 
EARNINGS PER SHARE 

a 

DIVIDEND UP 50% 


I am pleased to be able to report a 
significant increase in our pre-tax 
profits during die last Half-year. 

Better than for the same period last 
year, they reflect our commitment to 
performance, the management 
changes which have been made, and 
a good summer. Moreover, our 
continuing workload is at encour- 
aging levels. 

The Construction .Division has 
won the contract for the new Honda 


factory at Swindon. The Construction. 
Equipment Division has shown an 
outstanding performance, and the 
Property and Homes Divirion is 
making steady progress. Our other 
Divisions have performed up to 
expectations. 

Weather permitting, there is every 
prospect that our results for die year to 
March 1990 will be very satisfactory. 

John Douglas OJSJL Chairman 


Half year to 30th September (unaudited) 

Turnover 
Pre-tax profit 

Profit attributable to members 
Bantings per share 
Dividend per share 


SUMMARY OF RESULTS 

1989 

Kember (unaudited) ^JKH) 


161,170 

5,232 

3,175 

20.8p 

3.0p 


1988 

£000 

129378 

3,718 

2323 


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ITNANCtAt TIMES THURSDAY DECEMBER 7 1989 


Governments and banks 


Developing countries’ tariffs 


From MrBmce Leemtng, 

Sir, One can only sympathise 
with Lord Marshall's unenvja- 
ble position in. the imbroglio 
concerning 1 the future of 
nuclear power in the- 
broqghtaboutby the impend- 
mg privatisation of the elec- 
tricity industry. . 

He is quoted as saying that 
the problem of unexpectedly 
high costs, which has caused 
tiie Government to drop the 
nuclear sector from thesale 
programme, has 'arisen princP 
pally , because. “The fcmirg 

wanted full qfJw mmu'TTt g nar - 
antees of the debt as well as 
assurances that all rigniBrant 
risks would either be passed 


through to consumers or car- 
ried oy Government itself” 
(December l). It is not Lord 
Marshall's fault, of course, but 
regrettably the banks’ attitude 
•is absolutely ngf »*- 
: Iu October 1985, 22 sovereign 
states which were members of 
the UN-sponsored Interna- 
tional Tin Council chose to 
walk .away from a ?lbn debt 
commitment to a number of 
international banks. City bro- 
kers Hiding 

HpTrfnrf jgggi tec hnicalities, the 
govemnents zn question - led 
by the EC grouping - have 
sought for the pad; lour years 
to renege on the FTC’s con- 
tracts, atthmygh recently there 


have been reports that they 
may finally be shamed iwtn an 
out-of-court settlement far 
short of the true amount 
At the time of the default 
many disinterested and far- 
sighted individuals voiced 
the ir anxiety about the serious 
precedent being set On a BBC 
Analysis programme in 
November 1985 a senior banker 
Stated: The lesson we are 
learning is to take an entirely 
different view of the way we 
lend to governments and, 
among others, nationalised 
industries, , . , (the 22 govern- 
ments' action) is a fundamen- 
tal step in the wrong direc- 
tion.” 


Throughout, the most 
obstructive rrc member has 
been the EC. J u dgi ng by the 
Prime Minister's cautious 
approach today to European 
monetary integration, the mes- 
sages of the tin crisis have not 
been lost on sincere and realis- 
tic politicians, as well as on 
bankets. To its credit. Her Maj- 
esty's Government was alone 
prepared to stand by its tin 
debt obligations: however. 
Lord Marshall's woes b asi c al ly 
derive from the blow to com- 
mercial confidence suffered 
generally at that time. 

Bruce r-ppming ^ . 

Solars, 

Cfiiddingfold, Surrey 


Computer hacking 


From Mr Michael Daoenport 

Sir, As David Buchan says 
(December I), as far as EC 
trade concessions are con- 
cerned, the 66 AGP states have 
been shoved into the backseat 
by the new “colonies" in East- 
ern Europe. But it is not clear 
that AC? (Asia, Caribbean and 
Pacific) tariff preferences, as 
opposed to aid hand-outs, have 
been of significant value. 

Non-ACP developing coun- 
tries of Latin America and 
Asia have expanded total crude 
and processed tropical goods 
exports to the EC market over 
the last decade more rapidly 
than the ACP states whose 
exports are admitted tariff-free. 

Trade data does not indicate 


‘Junior’ accountants 


that the ACP states have per- 
formed relatively better in, far 
example, processed coffee and 
cocoa, refined vegetable oils, 
string and cordage, where their 
tariff preferences are substan- 
tial (8 per cent to 12 per cent). 
In the case of manufactured 
goods a very few ACP states 
have rapidly expanded exports 
of a few particular products to 
the EC. The most significant 
product has been clothing, in 
particular from Mauritius and 
Zimbabwe, where the ACP 
states gain from the Multi-fibre 
Arrangement restrictions on 
other suppliers. Other African 
ACP states have done rela- 
tively well in wood products 
(veneers, hardboard and so on). 


but on those items tariffs are 
zero far all LDC (less developed 
countries) suppliers. 

It is often argued that the 
complex EC “rules of origin” 
make it impossible for the ACP 
states to exploit their tariff 
preferences on manufactures. 
In fact the same rules of origin 
have applied to non-ACP 
exports entering the EC under 
the Generalised System of Pref- 
erence, and will apply to the 
newly-preferred exports of 
Eastern Europe. 

The ACP share in total EC 
imports has halved from 8.9 
per cent in 1970 to 4.5 per cent 
m 1988. In EC manufactured 
imports the ACP share has dro- 
poped from 6.5 per cent in 1970 


to per cent in 1987. 

Maybe the export perfor- 
mance of the ACP states would 
have been even worse without 
tariff preferences. But tariff- 
free access alone Is insufficient 
to ensure an above average 
export performance. 

To the extent that Eastern 
European exports to the EC 
have been constrained by quo- 
tas rather than tariffs, they 
may gain substantially from 
liberalisation. But this will not 
be at the expense of the ACP, 
who do not export big quanti- 
ties of "sensitive” goods, but at 
the expense of exports of Latin 
American and Asian LDCs. 
Michael Davenport, 

Overseas Development InsUoae 


Some real environment costs 


Sir, The most-needed farm of 
protection of computers 
against misusels management 
commitment, not yet more 
ingenious technological 
devices (Leader, December 4). 

Most of us who regularly 
c arry out computer security 
surveys and audits know in 
advance that one of the concta- 
sions we will almost certainly ; 
have to make is that our sub- 
ject has purchased security 
software- or hardware — and is 
failing. to use if properly. 
Indeed It is not unusual to fmd 
that the product, though paid 
handsomely far, has not even 
been installed: 

One of the saddest conse- 
quences of the current hysteria 
over “hacking" and “viruses” 
(both of whim are much rarer 
than is rammim ly thought), 
and the insistent demandfor 


legislation by such organisa- 
tions as the Confederation of 
wHHgTi industry, has beau to 
switch attention away from the 
critical issue of management 
education. 

Tour leading article could 
also have looked carefully at 
the resources actually avail- 
able to enforce “computer 
crime” - a specialist squad of 
just four lower-rank officers 

each of whom will be in the job 
for only three yearn. Govern- 
ment fliiifBrqr of responsibility 
for the topic away from the 
Home Office, then to the 
Department of Trade and 
Industry and now to a poten- 
tial private member’s bin does 
not encourage one’s hope that 
the enforcement issue wiH. ever 
be brought to public debate. 
Peter Sommer, 

Virtual City Associates. 

67 Mount View Road, N4 


From Mr David Gurney. 

Sir, David Waller’s percep- 
tive review of the chartered 
bodies of accountants (Decem- 
ber 1) gave a comprehensive 
survey of their dilemmas. But 
in one respect it touched 
merely the tip of the iceberg. 

There are six chartered bod- 
ies for accountants in the UK 
but there are a farther half 
dozen or so non-chartered bod- 
ies, each concentrating on a 
segment of the profession not 
totally covered by any of the 
others. Rationalisation- is 
sorely needed among junior 
bodies as it is among the larger 
organisations. 

The Institute of Financial 
Accountants was involved two 
years ago in negotiations with 
a view to rationalising the 
junior level of the profession. 
Unfortunately the negotiations 
petered out, tat the need for a 


streamlined representation of 
accountants at either level 
becomes increasingly more 
argent as accountants are 
■ pushed willy-nilly into the cen- 
tre of the sta g e by the pres- 
sures of financial legislation in 
the UK and the torrent of 
dir ectives from Brussels. 

It should be possible for the 
junior bodies to follow the cur- 
rent trend for mergers. If they 
did so they would be able to 
offer more effective continuing 
professional education for their 
members and would be In a 
strong position to qualify 
accountants as trained compli- 
ance officers, with the arrival 
of the Sing le European Market 
in 1992. 

David Gurney, 

The Institute of Financial 
Accountants, 

44 London Road, 

Seaenoaks, Kent 


Book trade sales figures 


From Mr Peter Beales. 

Sir, Mr Christopher Patten, 
Environment Secretary, 
resplendent in hia green finery, 
argues that the price of energy 
must reflect its “foil costs - 
including the environmental 
costs associated with its provi- 
sion" (November 21). The UK 
Government’s transport infra- 
structure plans will provide a 
test of whether these concerns 
are merely skin deep. 

Road and airport develop- 
ments, together with the 
“Channel Link,” provide a 
classic example of externali- 
ties: the community benefi ts, 
but under current arrange- 
ments the individuals living 
nearby suffer serious distur- 
bance and reductions in prop- 
erty values without proper 
compensation being paid. 

If the Government wish their 
environmental credentials to 


be taken seriously, they will 
ensure that appropriate com- 
pensation is made to those 
adversely affected by such 
schem e s. Such a policy would 
also ensure that the true costs 
to the community of transport 
developments are taken into 
account when particular pro- 
posals are decided upon. 

In the case of the Channel 
Link, where a private Act of 
Parliament is needed to imple- 
ment British Rail's plans, we 
shall all be able to assess not 
only the position of ministers 
but also the position of MPs on 
this important issue of princi- 
ple. Bearing in mind that Par- 
liament was assured that a 
link would not be necessary 
when the Tunnel Act was 
passed, I hope that MPs will be 
robust on this point. 

Peter Beales, 

111 Turney Road, SW21 


Staying-on in Scottish education India votes for change 


Front Mr Richard Pearson. 

Sir, Tour analysis of educa- 
tion and t ra ini ng (November 
29) rightly highlights the 
lamentably low performance of 
the UK in encouraging its 16-18 
year olds to crnithmn fa full 
♦hna education 

Ton look ^ as do many oth- 
ers - to Japan and mainland 
Europe for comparisons to help 
in the diagnosis of our prob- 
lem. However, many lessons 
are closer to band -if we look 
north. Research at ♦him insti- 
tute has highiightedhow the 
staying-on rates in Scotland 
are more than 10. per cent 
higher than in England. This 


formance has been attri- 
to a number of factors. 

Importantly, the education 
systems are ififfenent, and in 
Scotland there is an easier 
transition at 16 to; study for 
Scottish “higher* exams. 


where the commitment Is to a 
broadly based one-year period 
rather than the English highly 
specialised two-year pro- 
gramme far ‘A’ levels. Another 
important factor is that the 
Scottish have a culture which 
seems to value education more 

hi g hl y than fn lftn gfbtnd 

Improvements are necessary 
if our young people and the UK 
cam compete effectively in 
world markets in the future. A 
first pre-requisite Is to raise 
the aspirations of our children 
— and society at large — 
regarding educational at tain- 
ment. We need to value educa- 
tion as an end jtwdf. We also 
need to learn from and build 
an tifa compa r ative success of 
one pert of the UK, namely 

SwiHand. 

Richard Pearson, 

Institute of Manpower Studies, 
University of Sussex 


From Mr Chhotu Kdradia. 

' Sir, Your leader, “India 
Votes for Change” (November 
27), Mis to dgffne democracy 
as it ought to be practised in a 
modem society. Democracy is 
not simply about holding elec- 
tions ana casting of votes. The 
true concept of democracy is to 
arrive at a change peacefully 
through a dialog ue 

That is why there are two 
red lines in the House of Com- 
mons, the UK “mother of par- 
liaments” - to separate the 
rival parties. (The distance 
between the two line6 is that of 
a sword - or the Mace, symbol 
of the Speaker’s authority in 
the House of Commons.) 

More than 100 lives have 
been lost daring the polls in 
India, not to mention several 
hundred more during the cam- 
paign leading to the election. A 
life lost during an election is 


one too many. 

' The leaders, whether it is the 
Congress of Mr Rajiv Gandhi 
or Mr VP. Singh's Janata Dal, 
have failed to live up to the 
legacy of the founding fathers 
of Indian democracy. The basic 
components of any democracy 
are secularism, non-violence, 
the rule of law and social jus- 
tice. 

A true democratic state is 
one where the minority feels 
safe, where religions tolerance 
is a norm and where those 
vested with power behave hon- 
estly. Whichever party forms 
the next Indian Government 
should strive towards restoring 
these four basic qualities 
before India can again call 
itself the largest democracy in 
the world. 

ChhotU Karariia , 

18 Saxon Avenue. 

FeUftam, Middlesex 


Efforts in Chile to 
‘reconstruct a free country’ 


From Ms Elizabeth 
Cteary-Rodriguez. 

Sir, Barbara Durr’s article on 
the forthcoming elections in 
Chile outlined some of the elec- 
toral hurdles which will face 
Mr Patricio Aylwin*s 17-party 
coalition on December 14. 

It should be added that these 
are not the only obstacles set 
by General Pinochet's outgoing 
military administ ration which 
will hinder Mr Ayiwin's “great 
crusade to reconstruct a free 
country.” 

To achieve this goal he will 
be forced to abide by rules laid 
down by the current adminis- 
tration. The administration 
seeks to protect the military 
and prolong the influence of 
General Pinochet 

The changes to the Rhifam 
constitution, approved in the 


July plebiscite, omitted those 
reforms demanded by the oppo- 
sition which lessen the influ- 
ence of General Pinochet in the 
future decision-making pro- 
cess. 

These changes include provi- 
sions for 

• the permanence of the cur- 
rent commanders-in-chief of 
the armed forces; 

• the protection of the pres- 
tige of Eho police military; 

• respect for the opinions of 
the national security council, 
to be formed by the four chiefs 
of the aimed forces and four 
civilians; 

• non-interference by the 
civilian authorities in military 
affaire, such as the promotion 
of generals and the powers of 
the military courts. 

All these stipulations ensure 


From Mr T.A. Maher. 

Sir, The Publishers Associa- 
tion (PA) figures for book price 
rises over the 1980s, as cited by 
Observer (December 1), sadly 
owe more to wishfol thinking 
than rigorous statistical analy- 
sis. Rather disingenuously, the 
PA has chosen to process the 
data from its Statistics Collec- 
tion Scheme (PASC5) in a man- 
ner which yields agreeable 
results, rather than on a basis 
which is truly comparable with 
the Retail Price Index. 

Two indices may only be 
compared meaningfully if they 
have been calculated on the 
same basis. Yet the PA has 
chosen to calculate its index on 
1985 weights, and then to com- 
pare it with the RPL However, 
the RP1 is a chained Laspoyres 
index, where the weights arc 
changed in line with actual 
shifts in consumption over 


that a future Aylwin govern- 
ment will be confronted by a 
series of obstacles in its 
attempts to bring about any 
proposed reforms which affect 
the armed forces. 

These measures have been 
consistently used by the Pin- 
ochet adminis tration to stifle 

criticism of the chfi Mn Gov- 
ernment, and they have led to 
the fining and imprisonment of 
journalists and other critics. 

By retaining the power of 
the military courts to try civil- 
ians, the military can ensure 
that the sHmeing of their crit- 
ics continues. 

Furthermore, any attempts 
by the civilian Government In 
Chfle to change this state of 
affairs are bound to generate 
conflict with the armed forces. 

As General Pinochet said in 


each two-year period. When 
the raw PASCS data is pro- 
cessed to calculate a chained 
Laspcyres index, we get a very 
different picture. 

For example, from raw data 
available from 1981 to 1986. 
Fcntos calculates that on the 
correct basis, book prices have 
risen almost a quarter as fast 
again as inflation (37 per cent 
for books against 31 per cent 
for Inflation). The PA index 
shows a rise exactly In line 
with inflation. 

It would be speculation to 
suggest reasons why the PA 
choose to calculate price 
changes in such a manner. 
However, your readers will 
note that the PA is among the 
staunchest supporters of the 
Net Book Agreement. 

T.A. Maher, 

Chairman, Pentos. 

1 New Bond Street, Wl 


October 1989: “The day they 
touch one of my men the rule 
of law is finished.” 


In the light of such remarks, 
the Chilean people have no 
guarantee that the military 
will respect a new democrati- 
cally elected government 

Elizabeth Cleary-Rodrfguez, 
Research Co-ordinator, Latin 

America, 

Article 19, 

International Centre on 
Censorship, 

90 Borough Sigh Street, SE1 

Other letters to the Editor 
appear on page 23 of the first 
section. 



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FINANCIAL TIMES THURSDAY DECEMBER 7J98$ 


EC to encourage 
non-food uses 
for cereal crops 


By Tim Dickson in Brussels 

FARMERS in the European 
Community will he offered sub- 
sidies to grow wheat and other 
cereals for non-food uses if a 
plan unveiled in Brussels yes- 
terday is adopted toy member 
states. 

The controversial idea - one 
of several proposals in a report 
on the use of agricultural com- 
modities in the nonfood sector 
- is designed to encourage 
producers to find new market 
outlets for their crops when 
the reforms of the Common 
Agricultural Policy are squeez- 
ing farm incomes. 

The subject of intense dis- 
cussion in the European Com- 
mission since the EC summit 
of February 1988. yesterday’s 
paper will be scrutinised by 
farm organisations across the 
EC and by ag ri-ind ustrial 
groups such as Ferrozzi, which 
has been pressing Brussels for 
years to divert surplus EC 
cereals into bioethanol produc- 
tion. 

They are likely to be disap- 
pointed that Mr Raymond Mac- 
Sharry, EC Farm Commis- 
sioner, has adopted a relatively 
cautious approach and has 
stressed the EC's commitment 
to non-food uses, notably in 
research and development and 
in the subsidies already avail- 
able in the starch regime. 

The proposals include the 
formation of a special EC com- 
mittee to ensure greater coor- 
dination of initiatives and the 
development of a multi-annual 
programme of agro-industrial 
demonstration projects. 

Most eye-catching is the plan 
to subsidise cereals production 
where the fanner finds - “by 


Brazilian judgeputs freeze 
on imports of methanol 


By John Barham in Sao Paulo 


A FEDERAL judge has ordered 
a temporary halt to Brazil's 
imports of methanol while the 
courts decide whether metha- 
nol should be added to the 
nation’s fuel supplies. 

Environmentalists say the 
Government failed to draw up 
an environmental impact 
repo rt showing that methanol 
is not 5 toxic when burnt as a 
motor fueL 

The Government, which has 
imported 50m litres of metha- 
nol so far, plans to appeal 
against the court order. If the 
Government loses, the metha- 
nol would be stockpiled for use 
by t he chemicals industry. 

Earlier, government officials 
spoke of importing l^bn litres 
of methanol. The National 
Petroleum Council, the govern- 
ment agency overseeing the 
imports, the health minis- 
try and the Sao Paulo state 


Environmental Protection 
Agency had approved the 
imports. 

Mr Jorge Wilhelm, the Sao 
Paulo state environment secre- 
tary, said that methanol pro- 
duced less carbon monoxide 
fhanpetroL 

The imports are intended to 
avert a critical fuel shortage 
caused by a sharp drop in pro- 
duction of fuel alcohol, the 
alternative fuel distilled from 
sugar cane. 

The National Petroleum 
Council forecasts a L7bn litre 
shortage of alcohol in 1998, 
equivalent to 13 per cent of 
consumption. 

Alcohol fuels more than a 
quarter of Brazil’s cars. How- 
ever, demand for petrol is ris- 
ing faster than expected, which 
could force the country to sus- 
pend petrol exports and possi- 
bly start importing. 


COMMODITIES AND AGRICULTURE 

ustorenew Scandals shake Dutch into action 

subsidised 

. , Laura Raun on the problems facing the Netherlands’ food industry 

gram sales ■ ^ , u , 

to China i WStaSSE ■TVhPI 


means of a delivery contract 
with the relevant industry” - 
a non-food outlet. No specific 
mention is made of bioetbanol 
but this is one of several possi- 
bilities -.others include biode- 
gradeable plastics and various 
types of paper - which the 
ftnmml nrinn has in 

The plan is that participa- 
tion would be linked to the 

gristing but so for slow-moving 
set-aside scheme, under which 
EC cereals farmers are encour- 
aged to take land out of pro- 
duction in return for annual 
compensation payments. 

In return for receiving the 
subsidy a former would have 
to put at least 30 per cent of his 
ho lding into the set-aside 
scheme but would be able to 
plant 50 per cent of the land set 
aside with cereals destined for 
non-food use. 

He would receive the fhfi 
set-aside premium for the area 
left fallow - currently 
between EculOO and Ecu700 
per hectare depending on the 
region - and 70 per cent of the 
set-aside premium for the area 
used for “non-food" crops. 

This would be the subsidy 
which the Commission says 
would be “such that the costs 
for the industry of the raw 
materials will be comparable to 
world market prices.” 

Mr MacSharry’s office 
emphasised last night that the 
scheme would be limited to 
cereals and that the cereals in 
question would be counted in 
the maximum guaranteed 
quantity used as the trigger for 
price cuts under the cereals 
“stabiliser,” 


By Nancy Dtmne 

in Washington 

THE US is to renew subsidised 
grain sales to China, putting 
aside political considerations 
in the wake of the massacre in 
Tiananmen Square. 

After a recent meeting with 

fThirwKP official g and ho UTS Of 

Internal discussion. US Agri- 
culture Department offi cial s 
agreed to offer China Im 
tonnes of wheat, subsidised 
under the Expo rt En hance- 
ment Programme (EEP). 

Mr John Reddington, a 
USDA official, said that in 
accordance with the pro- 
gramme’s rales, the depart- 
ment was required to consider 
the long-term trade relation- 
ship between the US and 

C hina 

Grain traders are also hop- 
ing for new subsidy offers to 
the Soviet Union. 

The first round of talks 
began yesterday in Moscow for 
a new long-term grain agree- 
ment (LTA), and traders 
believe a large, new EEP offer 
will reassure the Soviet side 
that the US expects to sell its 
grain at competitive prices. 

No agreement is expected 
soon on the LTA, in spite of 
the increasingly warm US-So- 
viet ties and President Bush’s 
offer daring the Malta, summit 

tO begin ifinnfldlaririy 0U 

an overall US-Soviet trade and 
investment agreement 

Soviet negotiators have com- 
plained for years of the high 
tnriffa imposed on their prod- 
ucts by the failure of the US to 
grant Moscow Most-Favoured 
Nation status. 

Mr Steve McCoy, president 
of the North American ’Export 
Grain Association, said that 
until the US waived the Jack- 
son-Vanik Amendment, which 
denies MFN status, “there is 
no reason why anyone should 
act” The current LTA still has 
a year to run. 

Mr McCoy said the EEP sale 
to China w ent ahead because 
the programme was seen as a 
vital “underpinning” for 
former income. 

“We have to be pragmatic 
about these things. It’s the 
President's policy not to use 
food as a weapon.” 

Under rules issued for the 
EEP last month, subsidies are 
to be directed to markets 
where the European Commu- 
nity has been active with its 
own subsidies. The Community 
last year sold 1.5m tonnes of 
wheat to China after selling 
inane the year before. . 

The US last year sold about 
7m tonnes to Chin a, of which 
6m were u nder the EEP. How- 
ever, the future of subsidised 
sales there had been in doubt 

China bought all but 10.000 
tonnes of wheat still available 
under its last EEP offer - a 
proposal made before the Tian- 
anmen Square massacre. 


T HE MAXIM that “all 
publicity Is good public- 
ity” is not one that com- 
mends itself much to the 
Dutch food industry just now. 
Recent months have witnessed 
a series of damaging scandals, 
star ting in the summer with 
rfiny in contamination of tniTV 
and culminating in the con- 
tinuing case of the lead- 
poisoned dairy feed. 

Viewed against a back- 
ground of heightened public 
concern about food safety - 
especially in Britain, following 
the salmonella and listeria 
scares - these incidents could 
hardly have come at a worse 
time for the world's second big- 
gest food exporter. 

The dioxin-contaminated 
m il k came from cows grazing 
near rubbish incinerators that 
were emitting chlorinated diox- 
ins - resulting from the burn- 
ing of plastics. It led to a tem- 
porary ban being imposed by 
Italy on the importation of 
Dutch dairy products and mflv 
caU»c from the area around the 
Rotterdam incinerator have 
been halted. 

Then irradiated prawns from 
the Netherlands found their 
way to Britain, where irradi- 
ated food is forbidden. Irradia- 
tion . is Intended to destroy 
harmful microorganisms such 
as Mimonaiia and listeria but 
consumer groups fear too little 
is known about its long-term 
effects. 

The latest, and most damag- 
ing. scandal concerns the lead- 
poisoning of dairy feed with 
rice bran contaminated during 
transport This has resulted in 
the deaths of 100 cows and the 
tainting of milk and other 










W' V • ■ -■ 




Mr John Gammer, Minister of Agriculture, at the Royal 
Southfield Show earlier this week. He used the phrase “a 
criminal conspiracy” when the lead-contaminated feed 
scandal first surfaced last month. Restrictions have been 
lifted on all but about 30 of the 1,534 British dairy farms 
prevented from selling milk for the past few weeks 
because they had received consignments of the contami- 
nated feed. However, some 500 farms are still unable to 
move or sell beef animals, pending completion of a com- 
prehensive testing system by the agriculture ministry. 


products on 1,700 forms in the 
Netherlands and the UK 

Two commercial claims 
to tallin g about FI 9m (£Z36m) 
have been filed in the scandal 
and the European Commission 
is still investigating whether 
there has been criminal activ- 
ity in member states. 

The Netherlands is second 
only to the US as an exporter 
of form products, with 9 per 
cent of the world market, 
according to the Landbouws- 
chap, the powerful form union. 
That includes imported food- 
stuffs which are re-exported 
after processing. 

The country’s huge and pow- 


Inco to develop nickel 
mine in north Ontario 


By Robert Gibbons in Montreal 


INCO, the Canadian nickel 
producer, is to develop the first 
big new mine in the Sudbury 
nickel belt in northern Ontario 
in more than 20 years. It will 
cost C$18Qm (£9&5mX 

The McCreedy East mine, 
starting up in 1993, will have a 
life of at least 20 years. It is 
near loco’s Coleman mine, 
which is being expanded at a 
cost of C$40m. 

McCreedy East is the largest 
known undeveloped high grade 
nickel-copper sulphide deposit 
. in the Sudbury Haem 

At peak it should produce 
40m lb Crf Tiirkel apd 20m D> of 
copper yearly. With the latest 
mining methods, its productiv- 
ity will be twice that of Jnco’s 
existing mines. 

~ Inco is also spending CJlOQm 
on two nickel pro je ct s in Mani- 
toba and i s bringing its second 
gold property into production 
in north-west Quebec. 

The company forecasts pro- 
duction of between 440m lb and 
450m lb of nickel in both 1991 
and 1992. This compares with 


production of 430m lb this 
year. 

• Nickel consumption in the 
non-Commmust world Is likely 
to foil by 1 per cent this year to 
about 660,000 tonnes and by a 
further 2 per cent in 1990, 
according to the metals and 
mining team at W. L Carr, the 
London -based financial ser- 
vices group. 

The metal's fortunes win 
track those of stainless steel, 
which accounts for 61 per cent 
of ninkrf consumption. 

In contrast, nickel output is 
predicted to rise by 4J3 per cent 
to 580,000 tonnes this year and 
by another 5 J2 per cent in 1990 
while imports from the eastern 
bloc are likely to continue at 
the relatively high level of 
80,000 tonnes. 

As a result, says Carr, the 
nickel price is likely to drop to 
about $350 a lb before recover- 
ing next year. 

Carr expects an average cash 
price of $4.40 a lb next year 
with a possible trading range 
of $2NK$550 a S). 


erful food sector — comprising 
ministries, form associations, 
agribusinesses, fish companies, 
lawyers and insurers - prides 
itself on consistent quality and 
careful control. It dentes that 
there is a systematic trade in 
inferior food, although the 
existence of a few “rotten 
apples” is not denied. 

Consumers view the situa- 
tion more seriously, however. 
Mr Louis van Nieuwlaad. a 
nutritionist with the Consum- 
ers’ Union of the Netherlands, 
says: “The phenomenon of 
importing cheap or below-norm 
fowl, processing and exporting 
it is called ‘Dutching’ and is 


Caribbean sea 
island cotton 
venture formed 

By Canute James 

THREE Caribbean 
governments and private inter- 
ests have created a joint ven- 
ture to produce high-grade 
West In dian sm island cotton 
to take advantage of high 
prices. 

The venture, Caribbean Sea 
Island Cotton Company, based 
in Barbados, will initially form 
just over 4,000 acres in that 
island, Antigua and Montser- 
rat, and later expects to form 
100.000 acres in Guyana. 

The project is aimed at reju- 
venating what was once a . 
promising industry in the 
region, and to sell the product 
in North America, Europe and 
tiie Ear East 

Private investors have a 51 
per cent interest in the ven- 
ture, with Barbados holding 33 
per cent, and the remainder 
shared between Antigua and 
Montserrat 

Guyana will be involved 
through a local textile mill 
which will process the cotton 
produced by the company. 


well known. In every country 
traders try to make money by 
widening margins." He says 
there is a relatively well organ- 
ised “black market” in farm 

products. 

“There is a clandestine 
trade, indeed criminal." he 
alleges, with beef from con- 
demned cattle being sold ille- 
gally through a “low-priced 
channel." 

No one claims that more 
t b»n a few companies regu- 
larly trade in damaged food in 
the Netherlands bat those com- 
panies are threatening perma- 
nent damage to the country’s 
reputation. 

The companies which deal in 
grain that has been salvaged 
for animal feed make up less 
than o.05 per cent of a FI 6bn 
Industry which imports up to 
90 per cent of its raw materials 
from outside the EC, according 
to Mr Johanne den Hartog, 
head of the industry board for 

animal feed. 

Nevertheless, the board has 
been sufficiently shaken by the 
lead-poisoning case to Intro- 
duce a package of control mea- 
sures, including a permit sys- 
tem for traders in damaged 
feed ingredients. Mr den Har- 
tog believes between five and 
10 traders will be granted per- 
mits. 

Whether the Dutch food sec- 
tor has been shaken out of its 
complacency remains to he 
seen, however. An Agriculture 
Ministry official, commenting 
on the lade of figures on the 
trade In damaged food, said: 
“We don’t have to know how 
huge the trade is. . . we just 
have to regulate it” 


Two traders 
freed over 
tainted 
feedstuff 

By Laura Raun 
in Amsterdam 

TWO DUTCH traders charged 
with Imowingly seilinfttjntoj 
anim al feedstuff capable of 
endangering publ ic he alth 
have been released from cus- 
tody after spending three 
weeks in jail- - - - " ' 

Blr Cornelias do Brnijn. 
owner of De Brulju animal 
feedstuffs supplier, and Mr 
Petrus Timraers, an employee, 
are likely to be prosecuted in 
connection with the sale of 
damaged goods, accor din g to 
the public prosecutors office in 
Breda. An office spokesman 
said yesterday that a court 
date still must be set. 

De Brnijn sold rice bran 
con tamina ted with lead and 
zinc to Drogerij Marknesse, 

which processed it Into high- 
protein if 18 !” gluten replacer 
pellets. 

In a separate, civil damages 
suit, De Brnijn has argued 
that U knew of no lead poison- 
ing but only of zinc contami- 
nation when it acquired the 
rice bran. 

The bran was imported to 
Hamburg from Burma by 
Toepfer, a West Germany com- 
pany, and then forwarded to 
Antwerp before being barged 
into the Netherlands. 

The pellets processed from 
the bias were sold by Rova- 
grha. the marketing arm of 
Drogerij Marknesse, to Slump, 
a Dutch fodder company, and 
to merchants and formers In 
Britain. 


Legal action widens over 
Phibro cocoa awards 


PARTIES owed compensation 
by Philipp Brothers (Phibro) in 
a cocoa trade dispute, have 
taken legal steps to make the 
French court decision ordering 
the awards apply in Britain, 
French cocoa trade association 
(AFCC) members said yester- 
day, Renter reports from Paris. 

The AFCC expelled Phibro, 
one of the world's leading com- 
modity trading groups, on 
Tuesday for failing to pay 
awards of about £3m which 
two AFCC arbitration panels 
and a French civil court had 
ordered to be paid to the Inter- 
national Cocoa Organisation 
and five commodities trading 
houses. 

Under French law, Ftdhro’s 
asset* 'In' France coaid be. 
seized once it foiled to abide by 
the court decision, they said. 

Bnt AFCC members said 
they • believed London-based 
Philipp Brothers, a unit of Sal- 
omon, the US brokerage house, 
did not have any assets in 
France. 

Parties owed compensation 
by Phibro have taken legal 


steps to have the French 
enforcement action apply in' 
Britain and, therefore, to PhL 
bro's British assets, AFCC 
members said. 

The members would not say 
what type of legal steps had 

been taken. 

Phibro would be under 
greater pressure to pay the 
awards if the French court 
decision were accepted by a 
British court because the com- 
pany's assets there could be 
seized if it continued to reftisr 
to pay the awards, the AFCC 
members said. 

David Blackwell writes: Phi- 
bro plans to take legal action 
to set aside its expulsion from 
the AFCC. Phibro 's ection yrill 
argue thatthe company 'is ’stifl. 
appealing against the arbitra- 
tion awards, which total about 
£3m. 

The AFCC rules say that 
payments must be made not- 
withstanding any appeal. 

The dispute involves the pur- 
chase and sale of Ivory Coast 
cocoa in 1987-88. Phibro contin- 
ues to deny liability. 


WORLD COMMODITIES PRICES 


LONDON MARKETS 

BASE METAL prices improved across 
the board on the LME yesterday. Zinc 
prices continued the week's firmer 
trend, reflecting short-covering and 
tund buying Interest In the afternoon, 
and covering against potential 
commitments on December options In 
the morning. Tin prices moved ahead 
- traders said the market was still 
correcting an oversold position after 
posting a new contract low of $8,570 a 
tonne last week which to ok the decline 
during November to over $800. Some 
consumer offtake was reported, but 
buying still appeared to be Insufficient 
to sustain a long-term rise, analysts 
said. Lead prices ran up sharply 
towards the close. Traders said recent 
covering against expected tightness of 
December and January delivery dates 
had moved the market to a £20 a tonne 
premium for cash metal. 


Crude ofl (per barrel FOB) 
Dufcel 

Bran* Blond 

W. T.t. (1 pm aal} 

OB products 

(NWE prompt dollvary por to 

Premium Gasoline 
Gam OH 
Heavy Fuel Oil 

Naphiha 

Pstrato urn Argua Estimate* 


S1S4S-&S0Z +.176 
S1B.lSe.2Dz +020 
S2O4S0.4&Z +024 


S ISO-192 
sz07-aoe 
$114-116 
SIM-165 


Geld (por troy ez>+ 3404 

Silver (per trey oz>+ 557c -2 

Platinum (per troy o2) S48820 -2.75 

Panaqtum (por troy or) 113MB -0.85 

AtumMurn (tree market) $1055 +5 

Capper (U3 Producer) lllH-IIBc 

Load (US Producer) 38-Sc 

rvbdtoi (free market) 400c -10 

Tin (Kuala Lumpur market) I7.63r +0-02 

Tin (New York) 309c +10 

Zmc (US Prime Wcmm) 73l«c 

Cattle (Ihrtj wotgMJt 113.4Sp +1-33* 

Sheep (dead welghOt 212-00p +7,49* 

pi pa (live woonnt aaaop - 2 -itr 

London dally sugar (raw) *332.6* + 3-00 

London daily sugar (white) 5375 k +5 

Tate and Lyte aspen price 025-5 +05 

Barley (Engltali toed) £1150 +05 

Mato) (US No. 3 yellow) £129 

Wheat (US Dark Northern) C1385 

Rubber (spot)? 55.00p -050 

Rubber (Janflf 57_25s> -0.75 

Rubber (Feb)* 5B.2Sp -0.7S 

Rubber (KL RSS No 1 Jan) 2245m 4)5 

Coconut oil (PhffippkiMjS $400* ■ -30 

Palm Oil (MalaystonR $2600 -025 

Copra (PtrinppincsHi S270 -10 

Soyabeans (US) C170 

Colton "A* lode* 77 J0o -070 

Wocttopa (64s Super) 67Bp 

C a tonne unloss otherwis e sated, p-pence/kg. 
c-centa/tb. r-ringgtt/fcg. yOet x-Dee/Jan. wan/ 
Mar. vJlow/Ooc. w-Dec. z-Jen tMnat Commis- 
sion average (atstoek prices. * change ham a 
weak ago. VLondon physical market. tOF Ret- 
urn! am. Bui Bon market desO- m -Malays ten 
cena/kg. 



Close 

Prevtoua 

High/Low 

Doc 

688 

662 

871 6 65 

Mar 

654 

654 

660 651 

May 

665 

667 

870 864 

Jul 

679 

860 

684 876 

Sep 

695 

697 

698 694 

Dec 

718 

716 

723 717 

Mar 

738 

738 

742 736 


Turnover: 3693 (3366) lots of TO tonnes 
ICCO Indicator prices (SDRs per tonne)- DaHy 
price lor Doo S 76058 (750-28): 10 day average 

tor Oec 7 755.78 (75696) 

COW - I widow POX £/tonne 

dose Previous High/Low 


Jen 

884 

686 

670 683 

Mar 

668 

871 

673 688 

May 

685 

688 

690 685 

Jui 

703 

708 

712 702 

Sep 

723 

727 

729 722 

NOV 

744 

748 

746 742 

Jon 

764 

764 



Turnover: 2014 (3038) lota of 5 tonnes 
ICO hMBcaur mtoes (US cents per pound) tor 
Oec 5 Comp, daily 6051 (6051). 15 day a ve r a g e 
61.76 (61.87) 

W6M - LopdasWK <$ per tonne) 

Wee Ctoso Previous High/Low 

Mar 30850 238.00 30650 30150 

May 30S4O 301.00 31050 30350 

Aug 30 850 29650 308.00 3 Of 20 

Oct 238.00 290.00 29650 29350 

Dec 296.00 267.80 ■ 26650 

Mar 28250 277.00 2B450 261.20 

Wdt Close Previous High/Low 


Mar 37750 37050 37850 37250 

May 38450 37850 38550 38350 

Aug 99350 387.00 38450 390.50 

Oct 36450 358.60 36S50 36450 

Oec 35250 34850 35550 345.00 

Mar 352.80 34500 36*50 38350 

Turnover; Raw 4444 (10277) tots <4 60 tonnes. 
WWW 1671 (1865) 

Parto- White (FTr per tonne); Mar 2282. May 
2336. Aug 240B. OCX 222a Dec 217ft Mar 217ft 

CTUPEOW. — tP» Stoerrot 

Ctoc c Previous HtghrLow 


JUamMem. 98.7% parky (8 per tonne) 
Cash 1682-5 1851-3 

3 months 1687-9 1681-2 

Popper, Ctada A (E per tonne) 

Gash 15254 1517-9 

3 months 1S4V2 1557-6 

lead (E per tonne) 

Cash 451-3 438-40 

3 months 432-3 4253 

Mdbstff per tonne) 

Cash 8650-750 . 8650-700 

3 months BOOftflO aOSO-tOO 

Tin <3 per tonne) 

Cash 674080 <920-5 

3 months 664060 662080 

7*e. Special tflgh d io d e ($ par tonne) 

Cash 151S-3S 1490500 

3 mo n ths 13608 13205 

Ztoc (8 per tonne) 

Cash 150528 147080 

3 months 132535 1290800 

i tar SSs f/X rHw 
SPOT 15785 8 months: 151 


Ctoso Pmvtoua Htgb/Low 

Apr 200 3 209-5 2095 20BJ> 

May 234.0 2375 2335 2335 

Nov 1105 

Turnover 177 (268) tats c* 40 tonnes. 


Close Previous Htgh/Low 
Fed 14450 14450 14450 

dun 13950 13050 139-50 

Turnover 56 (30) lots of 20 tonnes. 


(Brtosa euppbod 
Mtft/Loar AM Official 


1687(1655 1656-7 

167571662 1681-2 


152871515 1514-8 

154571585 16345 


4527450 448-50 

4407427 4301 


8700 78600 630060 
810078000 800050 


056578580 867080 
885078690 6390700 


155571860 15806 

138571320 13805 


by A m a l g am a t ed Metal Trading) 
Karta dose Open Internet 
Ring turnover 8,800 tonne 

1672-4 34,797 Lots 

Ring turnover 3*600 tonne 

15455 75,171 Iota 

Ring turnover 11,760 tonne 

4402 11,432 I ota 

Ring turnover 1,200 tonne 

8000100 7 JOB tola 

Ring turnover 830 tonne 

675080 5.637 tola 

Ring tur n over 19875 tonne 

1380-5 15885 tots 

Ring turnover 5600 tonne 

134060 1378 tota 

259 9 month* 1-5050 


Jan 

19.14 

19.04 

1920 1897 

Feb 

18-35 

18.75 

1&87 16.68 

Mar 

18.52 

1844 

1&S6 1ft3S 

Apr 

IPE tndm 

18.30 

19.08 

1825 

1ft 10 

1825 


IT WIWB — NWt SIQ/Inde* point 
Ctoee Previous Wgh/Low 


Turnover; 8051 (9135) 


Closo 
Oec 20625 

Jan 197.00 

Feb 18730 

Mar 177.00 

Apr 168.75 

May 164.00 

•fun 161.50 

Jui 161.00 

Turnover 10573 


Previous Wgh/Lpw • 

203.75 80825 3025 

19450 197.00 19150 

188.50 187.50 183.75 

77050 177.00 174.50 

167.00 168.75 165P0 

164.00 164X0 162X0 

1624S 161.75 161X0 

184-00 IBS-50 183.00 

(12475)4 ota ot 100 tonnes 


Dac 

1004 

1618 

1616 1606 

Jan 

1638 

1642 

1646 1639 

Apr 

1655 

1857 

1680 IflM 

Jui 

1390 

13B6 

1391 1390 

BF1 

1606 

1610 


Turnover 252 (SB) 


255\-26aM 

2664,-256* 

2S&221 

26&Q49 


C equivalent 

281-284 

261-964 

261-284 

261-284 

2SS-3S7 

BftB) 

ec_6i 

320.45-32536 
US as ocjuhr 


W b a st Qpse Prevtoua Mgh/Uar 

Jen 114.1S 114.50 114JS5 114.00 

Mar -117.45 117.50 117 J0 117.00 

May 120.73 120-75 120-75 12025 

Jun 122.40 122X0 122.10 


Every dev el o pmen t at present shows Che 
over-supply to the world wool market. The 
Australian Wool Corporation ia buying about 
60pc ol large floor oftertnps in floor iston 
support and will probably have exhausted 
cash resources by toe yWs end. 

Borrowing has already been m i rang ed 
beyond that but oosb must eseaiata. Souto 
African wool is cheaper yef clearances 
there remain even lower. South America la 
another cheap source, undercutting levels 
Ifewd In Australia. China's absence n 
crucial on the demand side- In toe long 
term, demand recovery ia certain but near 
term uncertainties and wea kn e ss pemfet- 


10649 10820 KH8) 


Barley Gltnc Previous HjgttfLow 

jail TSE5 110.75 11UO0 110.75 

Mar 11X35 11320 113J0 

May 114.70 114.90 114J0 114-70 

Turogvan Wheat 410 (34$, Barley 98 (39). 
Turnover tots pi ioo tomes. 


P* 0 * ~ Wl (Cash SofflBirwd) pfleg 

Close Prevtoua WgWUw 
Feb 1095 1100 

Apr 1106 1105 110.0 

Jim 111.0 111.5 110.5 

Aug 1106 1105 

Turnover 10 (50) lea ol 3,^0 kg 


Goto (tine oz) $ price 

Close 403 It -404^ ' 

Opening 401-401 

Morning toe 402JJ5 
Afternoon fix 40286 
Day's high 404-404^ 
Day's low 400 12 -401 


Britannia 412-417 

US Eagle 412417 

Angel 412417 

Krugerrand 403-405 

New Sov. S6-97 

OW 8ov. 05-97 

Noble Plat S04J061240 


Spot 35130 

3 months 364-90 

6 months 37X20 

12 months 403X0 


A hetto di sn (BB.TSfc) C elts Puts 

SMke price S tonne Jan Mar Jan Mar 

1600 84 100 10 35 

1700 25 49 61 81 

1800 4 20 IB 160 

C appw (Grade A) Calm Putt 

555 138 w 23 64 

240Q 74 95 38 HO 

2500 34 57 117 170 

CeBea Jan Mar Jan Mar 

600 S3 77 9 

650 21 43 8 25 

700 4 23 41 » 

Cooea Mar May Mar May 

600 67 83 IS » 

880 37 S3 3S 38 

700 18 31 68 67 

testriCtsda Feb Mar Feb Mar 

1800 88 80 15 39 

1850 B3 48 31 60 

«B 33 28 SO 90 


US MARKETS 

TWO-SIDED TRADING continued in the 
gold, silver and platinum markets, 
reports Drexei Burnham Lambert 
Prices remained higher due to 
commission house and local short 
covering. Copper futures featured very 
quiet action closing slightly higher. In 
the softs, sugar rose sharply with 
strong trade buying seen. March 
gained 44 dosing at 1392. Cocoa and 
coffee were both stow. Short covering 
helped cotton prices rebound after 
posting declines earlier In the week. ' 
Expiration of the December contract 
was uneventful. The livestocks had 
strong gains in the belly futures. 
Commission houses were best buyers. 
Live hogs and cattle remained slow. 
The energy complex featured choppy, 
technical action throughout the day. 
Trading volume was tight. 

New York 

QOU3 TOO troy Vtroy oT. ” 


:oa.(UghQ4aj)00U3 galls StoartBf 

Latest Prevtoua Mgh/Lov 


Chicago 


Jan 

2043 

2084 

2046 


Feb 

2022 

2016 

2027 

2010 

Mar 

2005 

2021 

2006 

1925 

Apr 

1997 

1084 

1091 

1070 

May 

18.72 

19 29 

1077 

1024 

Jun 

1928 

1022 

19159 

1054 

Jui 

19.40 

1925 

1041 

1036 

Aug 

1924 

10-19 

1925 

19.19 

Sep 

19.10 

TftOB 

IOII 

1003 

Ctot 

moo 

1096 

0 

0 


3QVABgAM8 SJMOtw mla; canla/6Clb buariel 
Close Previous High/Low 


578/2 

575/0 

380/0 

572/0 

« 

592/2 

588/2 

GBS/0 

886/0 

r> 

603/4 

588/6 

604/2 

597/Q 


613/D 

608/2 

813/4 

am 

614/4 

811/4 

614/4 

608/4 

. 

608/4 

807/2 

610/0 

004/4 


815/0 

809/2 

618/4 

80B/0 


625TB 

618/8 

828/0 

618/0 



SOT ASEAN OS. 60.000 Bn; COTtS/tb 


WATtNQ OS. 42JM0 US gem, carts/US gaffe 
Latest Prevtoua High/Low 


Jen 

6385 

6406 

8410 

6325 

F«b 

6210 

8218 

6245 

6155 

Mar 

5875 

8874 

8895 

5825 

Apr 

5570 

5575 

5585 

5880 

May 

5370 

6878 

. 5880 

5340 

Jun 

5245 

6240 

5245 

5210 

Jui 

■am 

6190 

KWOT 

5175 

Aug 

neon 

5230 

5220 

5220 

Sep 

5312 

5810 

5212 

MM 



dose 

Prevtoua 

HJgWLow 



Dec 

1084 

1083 

1088 

1050 


Jan 

1006 

1084 

1007 

1060 


Mar 

1850 

1029 

1050 

IOII 


May 

1087 

1068 

WM 

1048 


JU) 

2010 

1089 

2010 ■ 

1074 


Aug 

2010 

1092 

2010 

1080 


Sap 

2006 

1097 

20.05 

1988 


Oct 

2007 

2010 

enn/t 

2010. . . . 

, 


COCOA 10 tonoaa.Sftonnea 

Close Prevtoua High/Low 


SOYABEAN MEAL 100 tnm; Sfton 

Ctoee Prevtoua HgghlLew 

Doc 1804 1808 ' IBftfi 








Deo 

B3S 

841 

880 

945 

Dec 

404.0 

4035 

4005 

4012 

Mar 

828 

931 

942 

828 

Jan 

4070 

4003 

0 

0 

May 

837 

839 

848 

838 

Feb 

4101 

4082 

4104 

4005 

jm 

950 

954 

983 

854 

Apr 

4152 

4132 

4136 

4126 

Sep 

968 

967 

870 

967 

-Km 

4108 

4166 

4200 

4166 

Dec 

988 

989 

■ 997 

983 

Aug 

42*2 

423-0 

4236 

421-5 

Mar 

1006 

1009 

1014 

1010 

Od 

4200 

4276 

4205 

i»a 

May 

1023 

1024 

0 

0 


180.4 

1806 

180 2 

1812 

181.1 

181.4 

1826 

1816 

1826 

1826 

1816 

1826- 

1846 

182.7 

1846 

184.5 

1807 

1846 

186.7 

1846 

1800 

mo 

1842 

1856 


! 5,000 Hu min; oewt a/Bgb bushel 
Ctoee Prevtoua tflgh/low 


OK 43441 4322 4832 4812 

Feb 4303 438.1 43SJS 4368 

PUimUM 60 boy tBj Srirey oz. 

Close Prevtoua MghfLmr 

Jan 508.4 5043 6085 5000 

Apr 511.2 8008 5100 5000 

M 516.7 614JI 619.0 S12J0 

OCt 523 2 581.3 6250 5200 

Sa-VBR 8,000 troy oat; can ts/troy tn. 

Ctoee Prevtoua tflgh/Lew 


COFFEE "C* 37,S00tog; ceTOa/lba 

Ctoee Prevtoua HtgWLoiw 


Dec 

7020 

7260 

7360 

7025 

Mar 

7661 

7071 

7760 

7040 

May 

7088 

7088 

79 36 

7860 

Jui 

81.04 

8066 

8165 

8085 

Sop 


8000 

8365 

8360 

Dec 

6863 

8860 

8660 

8660 

Mar 

8965 

8860 

0 

0 


Dec 

238/D 

234/4 

237/4 

Mar 

241/0 

239/2 

243/0 

May 

245/4 

243/2 

2*7/2 

Ju) 

348/4 

247/0 

280(2 

Sep 

345/0 

243/4 

245/8 

Dec 

843/8 

242/2 

244/0 

Mar 

280/8 

248/4 

25D/B 


Dee 

556.0 

5508 

5676 

Jan 

5996 

8576 

0 

Feb 

863.0 

661-0 

0 

Mar 

8576 

6856 

5800 

May 

5755 

5736 

5776 

Jui 

5836 

5816 

8656 

S«»P 

5916 

5805 

59UJ 

Dec 

8036 

801.7 

WWB 

Jan 

607 2 

6003 

O 

Mar 

6156 

6136 

5136 


SUGAR WOULD “11~ HQaoO Bw; oentaftoa 
Cl os e Prevtoua Hgh/Law 


5716 

Jan 

1460 

1363 

1025 

1368 

5705 

Mar 

1362 

1048 

1368 

13.70 

5916 

May 

1367 

T363 

14.04 

18.74 

qn nn 

JUI 

1363 

1343 

1363 

1863 

0 

Oot 

1367 

13.02 

13.47 

1023 

613.0 

Mar 

1289 

1266 

1265 

1263 


WON MADE COPPER gpOOO UnjcantafftB 
Ow Prevtoua Mgh/bow 


COTTON aojooo; oenta/Bn 
Ctoee Prevtoua 

Doc 8328 85.75 

Mar 8018 6847 

May 7080 6980 

Jut 7085 6080 

OCt 6EL68 6R35 

Deo 6480 64.04 

Mar 84.78 8443 


High/Low 

8070 88.45 

0948 68.78 

70j6B 89-95 

7060 7000 

06.75 86L50 

8475 8420 

0 0 


WHEAT OOOQ bu mto; ew n l flQ tb buahel 
Cto— Prevtoua HlghOow 

402/4* 40X4 

Mar 409/2 40476 4 TDM 

May 387/0 382/4 388/0 

Ml 337/2 354/0 358/4 

Sep 381/0 388/6 868/4 

Dac 873/4 388/2 3748) 

LIVE CATTLE 4ftOQQ lba; centl/lba ~ 

a °— Prevtoua Mfi/ULow 

DW 7542 7587 7S86 

£? 7<70 74.77 

Apr 74J7 7446 7*30 

Jun 7152 71 XS 722S 

A“8 7022 7017 70JBO 

0«_ 70-27 7007 7055 

B--3 

t-W HQOS3Qj)oo to;oarttt/K»a 

Ctow> Prevtoua Hgti/Luw 


cMWOEJUce 


BBUiawb (Base: September 18 1931 - 100) 
D«6 Dae 5 mnfli age yr ago 

1908.7 18034 18572 18700 

POW JONES (Beam: Dec. 31 1374 — 10(8 

Decs Doc 4 mnth ago yr «BQ 

Spw 127.10 127.10 12987 13039 

Futures 129.1$ 12089 13072 14020 


f&OOO lbs; eenta/Ka 

Prevtoua Ht^VLow 

128-05 127JX) 12S60 

128.10 12725 iKM 

127^0 12050 12550 

f 29.50 12025 VS6JX 

12620 0 0 

12555 0 0 

o 0 0 

124.90 0 0 

12450 0 0 


5162 

5162 

5167 

. -51.10 " . 


50.10 

6070 

' 4860 . 


4567 

40» • 

4566 


49.66 

4060 

4966 

4070 

4075 

8060 

4J0O 


48.70 

4860 

. . 4066 , 


4420 

44.70 

4460' ‘ •• • 


4560 

4660 

4660 ' • 


POWC BHAWS 40JX» tba: oontarib 

01080 P revtoua MgWtew 

£ ^ 53 

Mkr 6&S0 54.77 fifljn 

JP SMS 

Jui «12 84 JO 3039 - 

5066 

01-07 taon «» 

““ e® S ■ 


♦ \ 




1. 



33 





HNANOAL TIMES THURSDAY DECEMBER 7 19S9 


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LONDON STOCK EXCHANGE 


Property sector leads further advance 


HEAVY oversubscription for 
tile water privataatiorr Issues 
rad unexpected developments 
m the property and retail sec- 
tors inspired arintw mhahm. 
tial rise in the UK stock mar- 
ket yesterday: London share 
prices were moving ahemi 
strongly at the dose, despite a 
sluggish opening- on Wall 
Street 

Traders reported substantial 
buying interest from UK insti- 
tutions, with European funds 
alao continuing to take blue 
chips into their portfolios. She 
FF-SE Index mate a slow start 
buteBmbed in the day to 

dose with a net gain of 262 
points at 2353.7, near the peak 
off the session. Some strategists 


dmSbb Dates 

IMIMkgc 

Hew 27 

'Dm li Ok 27 

-v- — 

Dm 7 Dm 27 Jm it 


Dm SB . Jtatt . 


Jans Jn 22 

Vntai teas 

toMtaotM 

1 

H 

|l 

J 

cautioned 

f.hjif the market 


could now be moving into 
“overbought** territory and 
warned of a potential correc- 
tion down to the Ft-SE 2370- 


Shaze prices a abate 
easier but soon began to 
respond to the success of Mrs 
Thatcher in easQy confirming 


her le a dership of the Conserva- 
tive Party, a factor which baa 
been retried as potentially 
more unsettling for foreign 
than for domestic investors in 
UK equities. 

A more speculative nerve 

was touched by the news, fore- 
shadowed early in the session 
and fhpn confirmed, of King- 
fisher’s £46lm bid for Dixons, 
the UK electrical retailer. The 
highlight, however, was the 
excitement generated among 
property shares by the disclo- 
sure of British Land’s propos- 
als to inject £339m of portfolio 
assets into a new listed com- 
pany. This news put fresh vig- 
our behind the advance 
in property shares once Brit- 


ish Taprf hinted earlier this 
week at its wide-ranging port- 
folio plans. 

Property shares have lagged 
behind the market, against 
which the sector leaders were 
showing discounts of around 25 
per cent In a dd i ti on, the prop- 
erty sector has so far failed to 
share in the latest wave of 
overseas bids in the UK stock 
market, which has favoured 
banks and other financial 
issues, again very active yes- 
terday. 

Shares in Hammerson, the 
UK property group wind* sur- 
vived a bid assault from 
Rodamco of Holland, moved up 
sharply as analysts suggested 
that it could follow the route 


taken by British Land. 

Among internatioxsl stocks, 
Reuters continued to advance 
strongly as US arbitrageurs, 
short of stock in New York, 
sought shares in London. Ini- 
tial uncertainty over the trad- 
ing figures from Saatchi and 
Saatchi was outweighed by 
speculation on prospects of a 
bid for the London-based 
advertising group. 

Seaq volume yesterday 
remained relatively brisk at 
480.6m shares traded against 
4283m, but traders stressed 
that inter witrfryt business was 
heavy and that shortage of 
stock continued to be an 
important factor, especially 
among the property shares. 


FINANCIAL TIMES STOCK INDICES 


Dm 



Dm 

Nor 

Vmt 

ito» 

Ones CdfnpUaw 


e 

5 

4 

* 

38 



Low 

Htgti 

Low 

Omnwmiatas 

8X9S 

8302 

82A3 

8296 


8724 

8929 

82.93 

127 A 

46.18 






(80) 

(4/12) 

(9/1/35) 

(3/1/75) 

Bi-rf MhM 

92.17 

92-40 

92.40 

9233 

mas 

B&65 

90.56 

33.17 

105.4 

5tL53 






(150) 

(6/12) 

(28/11/47) 

(3/1/76) 

OnSnary Start 

1859.9 

vau 

18230 

18338 

18036 

1451.0 

2008.6 

1447.8 

2008.8 

48.4 







(5ffl) 

(3/1) 

(S/Bte) 

(26/6/40) 

Gold iftnrt 

286.7 

288.7 

2943 

2932 

2B0LS 

177A 

3000 

1S4.T 

734.7 

*35 





(27/11) 

(17/2) 

flfi/2/83) 

(26n0/71) 

FT-SC 190 Start 

23S3.7 

23Z7.S 

23034 

2311.1 

2276a 

1771.7 

24230 

17SZ.B 

2443-4 

988.6 







tSJOJ 

(3/1) 

(18/7/871 

123/7/84) 

Ord. CMv. VMd 

4J5I 

4U3 

AM 

4.86 

473 

4.99 

Basis TOO Oort Sacs 1VHW6. Flaad ml 1920. 

Earning Yld 

11.11 

11J4 

iim 

1126 

11.44 

12-65 

Ordinary V7-T5. Gold mhwa 12WSO Baata HOB 

P/E RatioPtaX*) 

1089 

1 0.77 

HI71 

1072 

10.56 

8 kS 

FT-SE IDOSI/IZna *MM0J2 



SEAQ Bargains(5pcn) 27.684 27,02* 29,388 31.424 25.2*1 21.857 

Equity Tumov«riSm)t - 8MSS 709.74 1011.72 804.35 663-63 

Equity Bsroahflft - 26,019 29.620 33,9*8 21*01 

Shores TfuSad (ml)t - 3900 36&2 4480 351.0 402.7 

Qrttapqr Stan Mta. Hearty ctangM Dsy 1 * Wgh 1881.1 Day's Lew 18302 


GILT EDGED ACTIVITY 

DacB OK 4 


Gilt Edged Bargshu 
6-Day over a ge 


85. 7 
86.9 


81.3 

86.7 


FT-SE, Hearty changes 


Open 

23219 


toaum. 

2316.7 


111 am< 
I 18301 


Upjn. 

18399 

m 


11 ajn. 

23202 


12 p.m. 

23236 


1 PJB. 

1*409 


2 p.m. 


3 pjn. 

16439 


18498 


4 pm. 
1862.0 


Day's High 2355.8 Day's Low 2316.4 


1 pJBL 

2327.6 


2 p.m. 
23382 


3 p.m. 
2310.4 


4 pm. 
2345.4 


*SE Activity 1 974. t Cvchiding Mrtwin 
DmtnNi & Owfsm t uro ovr. Calculattoa Of 

ttm FT hdlcm at doily Equity BargAM and 
Equity Van* and of B» ffira aa, mngM of 
Equity BargeM and Eqwty Vatuo. mb <a» 
continued on Jahr 31. Osama «*>Mi tar July 
28 •vaiiabt* on loqueat 
lonoon report and BW Share HtOK 

Tat 0898 123001. 


Welcome 
for British 
Land plan 

Brlfl^ Ijmdmari^itsrrtugn 
from a day’s suspension by rac- 
ing up by 51 before midday as 
the market reacted enthusiasts 
caHy to the board's restructnr- 
ing plan- The stock steadied in 
the afternoon to dose 46 better 
at 503p on volume of 7-3m 


ket - he *^ewJd be inclined to 
take some profits.” 

Mr John Chataway, analyst 
with Kitcat&Aitken said, an 
the other hand, that the offer 
was “far. far too low to have 
any chance of succeeding." He 
raid that Dixons was the larg- 
est electrical retailer- in the 
world. 

Mr Rodney Forrest at Smith 

P8xob« 

Share price (pence) 

220 ; 


The re stru c turin g involves 
tiie creation of a new company. 
New British Land CNBLX with 
control over £340m of assets. 
The rest of the group's assets, 
or about £lbn, would be sold 
within five years aru * the ea«fr 
passed on to shareholders' in 
the form of dividends and 
oppor tun ities to buy-in shares; 
The scheme exploits new roles 
an tax credits which wriHg»f»> 
tire e ffects of capital game tar 
on shareholders. < • 

Analysts welcomed the 
move, but with reservations. 
There were worries about the 
absence of a dear timetable for 
disposals and one commented 
Sat shareholders might ques- 
tion the arrangements for the 
distribution of NBL stock to 
management . . . 

One dealer anticipated good 

h fflrirwM ht Britkb Tjty l Knt 

though trade in NBL could be 
Aft" Be said that NHL could 
suffer from the same asset val- 
uation, problem from which 
British Land was now seeking 
to escape and . that Rs smaller 
qtea would malm J£ an «miw 
takeover target 

Dixons activity 

ltixons jumped onihe mom- 

annr niMMtiHi^ . fnwn ■ khij. 

that it was considering. 

. a bid for the company.' 
the ' oiler came, the 

bI ^t ph mmte HWp fnr(hpr 

move, «MMwp h trade contin- 
ued to be. busy. Turnover 
reached 29m as the price set- 
tled at lflp, compared with the 
I20p offer price and up 22 on 
the day. 

Analysts ffnnfahnakern 
displayed a broad spectrum of 
views on what Dixons’ share- 
holders should take. AH agreed 
that the prevailing price . 
suggested that Kingfisher's 
offer was only a sigh tin g shot 
There might, be more to come 
and “there wastalk of an 
Anglo-Enropean consortium 
making a rival hid. Such 
thoughts left Kingfisher 17 
lower at 290p. _ 

But Mr Piml Deacon, an ana- 
lyst with G oldman Sachs, ecb- 
oed the caution of most mar- 
ketmakers saying that given 
the odds on a referral to the 
Monopolies arid Mergers Com- 
mission- the combined group 
would have about a quarter of 
the UK electrical retailing mar- 



120 


100 


1988 


1989 


New Court also felt that inves- 
tors should hang on; "King- 
fisher most feel mat there is a 
good chance they can get it 
through the Office- of Fair 
Trading [which considers 
for referral to the MMCJ." 

Saatchi news 

Full-year figures at Saatchi 
and Saatchi confirmed the 
company’s woes. The shares 
slipped further on news of an 
80 per cent fell in profits, 
adding to recant weakness. But 
tWa finniwi out bargain hunt- 
ers which in turn rekindled 
talk of a possible bid. The 
shares recovered quickly from 
their low of 2SBp to close a net 
15 better an the day at 283p. 

Dealers spoke of bears clos- 
ing their positions, Hwt jg spe- 
culators buying the shares 
back at a lower level having 
sold short in of a 

•fail- Ms Lores Tibten at War- 
burg, Securities, the company's, 
broker, cut her forecast for the' 
current year from £75m to 
Mm, while Mr Andrew Mfllg 
at BZW stayed <m £65m but 
edgedMs <wnifag « per share 
forecast lower to take an 
increased tax charge into 
account. 

The leaden In the property 
sector enjoyed a highly active 
day following the news of the 
restructuring of British Land. 
Volume in MEPC was an 
healthy 5&i as it fell back 3 to 
545p. Land Securities, which 
traded 3m shares, slipped 6 to 
S42p/ 

There was same profit-taking 
following rises in both issues 
on Tuesday and yesterday 


morning, but there was also a 
fear that MEPC and Land Secu- 
rities were too large to exploit 
the tax concession British 

Tjmrt Kart latchfid Onto, Tanrt 

Securities* portfolio is worth 
£5^bn and MEFC*s £3.6bn and 
neither, the argument goes, 
could sell a sizable proportion 
without flooding the British 
property market. 

Hammerson. however was 
not held back by the size of its 
portfolio. Hammerson “A" 
closed 40 ahead at 8S0p. Much 
of what it owns is abroad 
which would allow it to spread 
apy sales- through several mar- 
kets furthermore Standard 
Life, which owns 30 per cent of 
Hammerson, may mess for the 
company to emulate British 
Land. There was ai«»n a whis- 
per in the market that 
Rodamco, the Dutch group, 
which opened its failed assault 
on Hammerson a year ago 
might be preparing to reopen 
the hid. 

Magazine publisher Builder 
Group said it was in mik* that 
might lead to an nffer for the 
company, and the shares 
jumped 22 to 3Q? p Dealers first 
thoughts were of remap , which 
has an 1L05% stake, but ana- 
lysts SOOn Trtternatlftnal 

Thomson, the acquisitive 
Canadian-owned publishing 
giant, and Reed TutanatlMMl 
to their list of possible suitors. 
Reed was in good form, rising 
12 to 430p on good turnover of 
&2m shares. Dealers said that 
a recent strong seller was no 
longer operating arid the pri c*» 
was catrfpng np with the mar- 
ket’s firmness over the last 
week. Reuters reached a sec- 
ond consecutive dosing high. 

18 UP at 1019p, a gain mi ufanng 
US buying. 

A res ur g en ce al European 
takeover speculation swept 
financial sectors. Clearing 
banks were unsettled by recent 
prefits dnwftgr aiBng w but man- 
aged a. .gradual improvement, 

, during the day. NatWest .were' 
finally 7 higher at 347p on 2Jm 
while Lloyds, despite what 
dealers said was a sizeable sell- 
ing order, managed a 5 gain at 
433p on 2.4m. 

TSB, heavily bought on 
Tuesday as talk of European 
stakebuilding, edged up 2 Vi 
mere to 129‘Ap on 4.4m. Royal 
Bank of Scotland were also 
stimulated by persistent talk of 
stakebuilding and bid specula- 
tion, dosing 6 firmer at 198p. 
Profits upgradings by a leading 
agency broker triggered keen 
buying of First National 
Finance, 15 higher at 219p, 
Provident Financial, 7 up at 
355p and Cattles Holdings, 
which put on 3 to 58p. Baltic 


Leasing rose 3 to 13Gp. 

Insurances moved shandy 

Ki gKor as Crmtlngntal takeover 
speculation reappeared. The 
fifes were among the best per- 
formers, Legal A General 
aridfog 8 at 417p and P mrtentffl] 
6% to 223V4p. Composites, after 
a Scottish seminar hosted by 
oha of the Mg f ^mrtnn brokers, 
responded to whispers that 
European stake builders were 
hyif jn the market. Guardian 
Royal Exchange (GRE) 
advanced 10 to 254p on 2£m 
shares - Italy’s Generali is 
raid to have h unt a stake in 
GRE of between 2 and 24> per 
cent A couple of large trades 
in Royal Insurance, of 1.6m 
shares each, saw the shares 
peaking at 512p before dosing 
at 507p, up 4 on balance. 

Tiphook reported sharply 
higher profits and rose 8 to 
442p. However, some in the 
market expressed caution 
about the company which Is 

FT-A All-Share Index 


1250 



Equity 


Traded 


Turnover by volume (ndfon) 



Oct 


Nor 


Dec 


NEW HIGHS AND LOWS FOR 1989 


nuriMHam. 

5^^^ii5'pqi 5r4 » yrM Mopfrooo« 

m WUSTMUS m Rogu. 198419 8 mvl 
a>». B. PtafaM jta, Rm arn*. Wta r. 
ilTOtaawMt,) me — 

( 2 J» OL 8 (I) OVERSEAS 
NEW LOWS (SO- 


anwi iwom 

nuatMtaM 


‘ CO 

jmexowEEMMomFoaoe 

a) Mxwmuu <n) Brompqxv Baco. 
DMm. r «mw« Grp, Grampian. Bmc. PCT, 
6£P. InU. Seat. H arfW. M a n tnig W. TSL 

RMM Morons » MPBM ( 3 ) MfCRT 

m SOUTH wnews |t| TEXH 1 JS fn 
TOSACCOa ftl TBAHaP OHT f t) TWU 8 T 8 
CO HMt M TWSO IU 9 KET CO- 


still ndred in legal action over 
its bid for Sea Containers «md 
the share is still substantially 
below its value, 512p, when the 
offer was launched. 

The excitement over the hid 
for Dixons spilt into other 
retailers. E tam was one of the 
best performers as speculative 
buying led to a persistent 
shortage of stock and the 
shares climbed 11 to I77p. 
Grea t Universal Stores were 
firm ahead of interims today 
and GDS “A" shares closed 28 
better at 1118p. 

United Biscuits retreated 
from the day’s high as analysts 
at Hoare Govett cut profit fine- 
casts from £224m to ggjfim for 
1990. They cited continued 
slackness in the biscuit market 
after the hot summer, and con- 
cern over tougher competition 
on frozen foods. The shares 
ended 4 better on the day at 
384p. 

Thames Television slipped 13 
to 498p on news that it was 
buying a US production com- 


APPOINTMENTS 


GEC subsidiary posts 


Mr David Fletcher has been 
appointed a deputy managing 
director of GEC-Marconi; he 
was an assistant . managing 
director, and managing direc- 
tor of Marconi Defence 
Systems where he is succeeded 
by Mr Derek Dickinson who 
was assistant man a g ing direc- 
tor. 

Mr Wally Paterson has been 
appointed 311 ossistant manag- 
ing dir ector of GEC-Marcam;' 
he — wmw j fl gTn g director of 

GEC Sensors where be is suc- 
ceeded -by Mr Gwyn Thom a s 


who was general manager of 
the electro-optical systems 
group of GEC Sensors. 

Dr Martin Read has been 
appoi n t e d m ana g in g director of 
Marconi Command & Control 
Systems. He was director, com- 
munications division, Ma r con i 
Defence Systems. 

Mr Ron Howard has been 
appointed chairman of GEC 
Avionics, taking over from 
Marshal of the Royal Air Force 
Sir Michael Beetham. who 
remains a director. Mr Howard 

was managing director. 


■ Sir BatrickMcNafr-WllKm* 
MP, has been app ointe d 
chairman of VOUCHER 
VAULT, Redditch, which .. 
operates the Voucher Bank, 
believed to be the first one-stop 
shop for incentive popular 
branded vouebenm the 
busumas-tobusmess sector. 
MrHowigdDimgbifeRtdfttBg 
has bean appointed 3ales 
manager for sales promotion 
and PR agencies. . 

■ TLP. EUROPE, Aylesbury, 
has appointed Mr David 

as finance iBtegte 
from December 6;He was . 
finance director of D.C. Cook; 
Holding s, and, wig .remain a 
iMm-executlvedirector. He 
succeeds Mr Joseph Los who 
resigns from the board an. 
pecemberSl to sursueotiier- 


Pettingidl has beei appointed 
group finance director at D.CL 
(kwk from January. 

■ Mr Peter Todd has been 
appointed director general of - 
the MARKET RESEARCH 


SOCIETY. He was chief 
executive of the Poster Audit - 
Bureau. 

■ Mr Hugh Parker has been . 

-appointed teirm an of 
CORPORATE RENEWAL 
ASSOCIATES. He was senior 
director of McKInsey & Co. 

Mr TJwiHePlriiton. wfaofiamed 
CRA,ml984,contmtt!esas - 
Tnanflg w director. 

■ Mr John H. Davy and Mr 

Robert r. Garner have been 
a^xrfnted joint managing 

director s of E GGAR 
FCXtRESTER. 

■ Mr John Bridgwater has 
been appointed to the board 
of PIPER CONSTRUCTION 
MIDLANDS, part of Ptoer 
Securities Holdings. Be is chief 
surveyor. 

■ EMPLOYERS 
REINSURANCE 
CORPORATION has appointed 
Mr PAL Edwards as general 
manag er and Mr M.W. Furie 
as assistant general manager 
and chief i 


Finance director 
at MTS 

■ MARITIME TRANSPORT 
SERVICES, the company 
which completed a m a ng e m e n t 
buy-out of the major port 
fn te i-pwtg nf Highland 
Participants, has appointed 
Mr Ian Waddington as finance 
director from January L He 

is a partner with Ernst & 
Young, and on secondment - 
to MTS. Appointed as 
non- ex e cutive directors a re: 
deputy chairman SSr Geoffrey 
Ltttler, a NatWest Investment 
Bank director, Mr William 

Kirkpatrick; Mr Christo pher 
McCann, a director of County 
NatWest. and County NatWest 
Ventures; and Mr George 
Blackball, a past managing 
director of the Port of 

Felixstowe. 

■ DATA GENERAL has 

appointed Mr Peter Ferrigno 
as director of marketing and 
wtrMto g ie planning . He W3S 
software and services division 
director. 

■ Mr Michael Hart, deputy 
chairman of Foreign & 

Colonial Management, has 
been appointed chairman of 
the ASSOCIATION OF 
INVESTMENT TRUST 
COMPANIES. 

■ Sir Philip Jones, chairman 
of the Electricity Council, has 
been appointed a nonexecutive 
director of TOTAL OIL 
MARINE, UK subsidiary of 
TOTAL Compagnto Franpdee 
desPdtrales. 



VSEL CONSORTIUM has 
appointed Mr Norman Broad- 
hurst (abooe) as finance direc- 
tor from Much next year. He 
is finance director of United 
Engineering Steels. Mr Mich- 
ael Powell has been appointe d 
director of business develop- 
ment from January L He was 
a consultant with Bain & Co. 

■ Mr D. Peter L. Davies has 
been a pp oin ted a director of 
PRINCIPALITY' BUILDING 
SOCIETY. He is executive 
director, corporate finance, 
N-M. Rothschild and Sans 
(Wales). 

■ COMTEXT 
INTERNATIONAL has 
promoted Mr Malcolm Hart 
to director of international 
sales, and Mr Peter McIntyre 
to marketing manager. 

■ Mr Fete D.G. Tompkins 
has been appointed a partner 
of LANE CLARK & PEACOCK, 
actuaries. 


pany. Reeves, for about 257m. 

The oil and gaa sector 
attracted plenty of support and 
some good rises across the 
board. The cold weather was 
said to have boosted British 
Gas a further 4!4 to 225p on 
turnover of 6.6m. BP moved np 
2% to on 7.1m »**<i Riwii, 
where analysts are still visit- 
ing the Far Eastern interests, 
added 5 Vi at 472 Vip on good 
turnover of &5m. 

Dealers spoke of renewed 
spec ulative demand for Cen- 
tury (Ml which moved op 3 to 
I53p on fa * tv of possible stake- 
building. 

The squeeze in the building 
sectors became even more 
acute yesterday and the lead- 
ers responded with further 
strong gains across the board. 
The “German factor " boosted 
Redland 6 more to 564p, Blue 
Circle 8 to 238p and RMC 17 to 
681p. Other good performers 
Included AMEC 12 higher at 
430p and Whnpey which moved 
up 6 to 283p. 

A report that the Mamies- 
matin consortium, in which 
Cable & Wireless has a sub- 
stantial stake, has won the sec- 
ond West German cellular 
licence, boosted C&W shares 4 
more to 526p on turnover of 
3.3m shares. British Telecom 
attracted renewed American 
demand and put on 4Vi to 
278 Vi p on keen turnover of 
7.4m. Racal Telecom, regarded 
as one of the favourites to win 
the West German licence, 
slipped 5 to S92p with Racal 
Electronics finally 3 off at 244p. 

Ferranti added a penny at 
42p, after 44%p. amid talk that 
GEC may still be interested in 
Hddmg for the group. On Tues- 
day it was announced that 
nominee company Delaporte 
had increased Its stake in Fer- 


TRACNNG VOLUME IN MAJOR STOCKS 





am 

AiQ4 tov 1M0 221*, *0i 

Aa.Bm.Foo* «i <a +3 



tad on tmOKag wotama lor 


UgdlCmnl . 

I Atptm aoeurdla* 4 aaH Onugh tho S£AO tyMn , 4 Wrt oy unW i pm 


ranti to L95 per cent 
Crystalate jumped 12 to 64 d 
after the preliminary figures 
came out better than the mar- 
ket had expected. 

Norcros, the building materi- 
als to print and packaging 
group, advanced despite a 
severe downturn in interim 
profits revealed yesterday. The 
shares rose on confirmation 
that the final year dividend 
would remain rniphanpprt 
The market had expected 
profits around the £20m mark, 
but the company reported 
interim p r r rfi t s nf tl a_32m t from 
e»T2m last year, while earn- 
ings per share slipped from 
14JLp to 83p. The shares closed 
np 15 at 239p. * 

Trafalgar House were 
wanted following press specu- 
lation about a possible bid 
from Bouygoes, the French 


construction group. Turnover 
was brisk with 3 Jim shares 
traded. The shares gained 15 to 
362p. Confirmed plans to float 
its US subsi diary continued to 
benefit BTR. They hardened 9 
to close at 464p. 

Christie International fell as 
bid talk faded. The market had 
awtiripatprt a bid from either 
ADT or Asker International, a 
Japanese art Gallery, each hav- 
ing a stake of around 6 per 
cent in the company. The 
shares eased 9 to 235p. 

Macarthy gained 13 to close 
at 231p as bid talk resurfaced. 
An overseas buyer was 
reported to have been in the 
market, thoug h turnover was 
said to have been thin 

Smith Industries appeared to 
benefit from some investor 
cantion over the outlook for 
shares in British Aerospace. A 


couple of large buyers were 
said to have been in the mar- 
ket and Smith Industries 
shares added 4 to 275p. British 
Aerospace continued to 
recover from fears of a Euro- 
pean Commission investigation 
into Its £38m “sweetener” deal 
with the British Government 
at the time of the Rover Group 
sale. The shares put on 6 to 
close at 5Q3p. 

The number of stocks listed In 
the Trading Volumes table on 
this page is increased from 
today from 128 to 145, 
reflecting the main alpha 
stocks but excluding bid situa- 
tions. 


■ Other market statistics, 
including FT- Actuaries 
Share Index and London 
Traded Options, Page 24 



' i 


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FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


FT UNIT TRUST INFORMATION SERVICE 


Current Unit Trust Prices are available on FT Cityline. To obtain your free 
Unit Trust Code Booklet ring the FT Cityline help desk on 01-825-2128 






































































































































































































































































































































































































































































































/V* 




FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


LONDON SHARE SERVICE 


Lotsat Share Prices ore available on FT Cityline. To obtain your free 
Share Cade Booklet ring tho FT Cityline help dask on 01-925*2128 




PAPER, PRINTING, 
ADVERTISING - Contd 


TEXTILES -Canto 



Start 

'arttydelOp. 


Kart I . 

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OIL AND GAS -Contd 

1 Ip^MSUS 


TOBACCOS 



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TRANSPORT 


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■ -3*«vvr 






0 


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£1 


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ADVERTISING 




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■* 


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3.71 11.9 1 102 1 




Stock Exchange drallnq cLraltlc-atkuB are Indicated to IM fight 
ot security lumn a Alpha.p Beta, y Gamma 
Unless otherwise Indicated, prices ana nrl dividend* are In pencr 
and denominations are 25a Estimated pnce/earning* rathn and 
coven are based on latest annual reports and account* and. where 

• 18.2 possible, are updated on hall -yearly figure* P/Es are calculated 
l 78 on ■■net" dfetribm Ion basis, earning* per share being computed on 
.7 b. 2 profit after taxation and unrelieved ACT where applicable' 
.9 9.1 bracketed figures indicate 10 per cent or more difference If 
.4 l calculated on "nil" distribution. Coven ore based on 

• 62 "maximum” distribution, this compares gross dividend costs to 

• 12.7 profit after taxation, excluding exceptional profits/Uwes but 

- - including estimated extent of offsetubit ACT. YleWiareMsedM 

- - middle prices, are gross, adjusted to ACT of 25 pa- amt and allow 
« 22.9 fa- Mine of declared distribution and ritfHs. 

- - • 'Tap Stock" 

• 4.6 • *tohs and lows marked thus hare been adjusted -to allow for 

- - rights Issues lor cash 
T -interim since Increased or resumed 
t Interim since reduced, passed or deferred 
tt Tax-free to non-residents on application 

• Flgwes or report awaited 

V Mot officially UK listed; dealings permitted under rale 
' 535f4Xa) 

9 USM; not listed on Stock Exchange and company not 
subjected to same degree of regulation as listed securities. 
If Not officially listed. 

# Price at time of suspension 

1 Indicated dividend after pending scrip and/or rights Issue. 

cover relates to previous dividend or forecast. 

9 Merger bid or reorganisation In progress 

{ Not comparable 

Same Interim; reduced final and/or reduced earnings 
Indicated 

f Forecast dividend; cover on earnings updated by taten 
Interim statement 

I Cover allows for c onve r si on of shares not now ranking tor 
dividends or ranking only for restricted dividend. 

* Cover does not allow for shares which may alio rank for 
dividend at a future date. No P/E usually provided. 

I No par value 

-Fr. Belgian Francs. Fr. French Francs ft VleW based on 
assumption Treasury BUI Rate stays u nchanged until maturity of 
stock, a Annualised tflvldrnd. b Figures based on prorpectns or 
other offer estimate, c Cents, d Dividend rate nM or payanie on 
part of capital, cover based on dividend on full capital, e 
Redemption yield, f Flat yield, g AsswnM dividend and yield. II 
Assumed dividend and yield after scrip issue. J Payment from 
capital sources, k Kenya m interim Inghrr than p rev i ou s total, n 
s nl e« k*9hts Issue pending a Earnings tuseo on preliminary figures, s 
i u Dividend and yield exclude a special payment, t Indicated 
- „ . y dividend: cover relates to previous dividend. P/E ratio based on 
, latest annual earnings. ■ Forecast, or estimated annualised 
_ ’ dividend rate, cover based on previous year's earnings, v Subject 
, ?' 5 to local tax. a Dividend cover In excess of 100 times y Dividend 
, , and yield based on merger terms, z Dividend and yield Include a 
*■* special payment; Cover does not apply to special payment. A Net 
dividend and yield. B Preference dividend passed or deferred. C 
Canadian. E Minimum tender Brice. F Dividend and yield based 
on prospectus or other official estimates for 198B-89. G Assumed 
dividend and yield offer pending scrip and/or rights Issue. M 
Dividend and yield based on pros pea us or other official estimates 
for 1984. K Dividend and yield based on prospreus or other 
official estimates for 1990. L Estimated annualised dividend, 
cower and P/E based on latest annual earnings. M Dividend and 
yield based on prospectus or other of lldai estimates for 1988. N 
Dividend and yield (used on prospectus or other of/iciaf estimates 
for 1989-90. P Figures based on prmpcctm or other official 
estimates tor 1987. B Gross. R Forecast annualised dividend, 
cover and p/e based on prospectus or other official estimates. T 
Figures assumed. W Pro forma figures. Z Dividend total to date. 
Abbreviations: d ex dividend; c ex scrip Issue; r ex rights; n ex 
all; An capital distribution. 


REGIONAL & IRISH STOCKS 

The following H a selection of Regional and Irish stocks, the 
latter being quoted In Irish currency. 


Albany tav20p.... 
Craig & Rose £L. 


U Jfe 


Finlay Pkg.5p 
Holt UosJ Z5p. 


IRISH 

Cv8fa%U»91..| £96*1 
9pe Cap Lil 1996 . £9*0 
Fm. 13% 97/02... I £U51 


ArtoUs 

Carrol (P.J.I \ 

HolMR. &IU 

Mellon Hid®. , 

WG 

Untied Drag 




TRADITIONAL OPTIONS 

3- mo nth call rates 


. . * - . ~ it. 




Industrials 

Allled-iyoas. „ 

Amstrad . - 

AstrelBSR). 

BAT ... 

BOCSffc. - «... 

BTR 

Barclays 

SlucQrcJ*. «... 

Boots. 

Bovtairn ...... 

BrH Aerospace.. .. _ 

British Steel.... 

Brit. TMeeom 

Cadbury*. 

Charter CaaL.««««,..., 
Comm Union........™. 

Courtaulds. _ . ............ 

Eorouionel 

FKl „ 

FttFC. 

GeotakJem. 

GEC. _ 

Glaxo. 

Grand Met 

GnudUn 

GKN „ 

Hanson 

Harter S/dd. 

U3 . 

Jaouar 

Ladfaroke 

Legal 4 Gen. 

Lex Service „ 

Lloyds Bank 

LacasMs. 

UartsASpeaccr 

Miduudirr. „ 

61 ergon Grenfell . . .. 

Nat West 6k 


P&ODfd 

Polly Peck 

Ratal Elect. „ 

RHM 

Rank dig On) 

toed mtiil 

STC ... 

Sears. .... 

SoiKi. Beedum A. 

Tt 

TSB 

Teico 

Thom EMI 

trust H Buses. «... 

T&N 

Unilever 

Vickers 

Wellcome, 

Property 

Brit Land _ _ 

Control Sees.. 

Land Securities. 

MEPC 

Moontlefgh. 

Oils 

Bfft P o u tHa a n 

Bsrnuh Oil 

Charttriull 

ComgyPetJm 

Prem ler.. 

Shell 

Tudur Res. 

Ultramar 


Unrba 

RT2. 


































































































40 


CURRENCIES, MONEY AND CAPITAL MARKETS 


FINANCIAL TIMES THURSDAY DECEMBER 7 5989 

• H 


FOREIGN EXCHANGES 


FINANCIAL FUTURES AND OPTIONS 


• r i ^ \ - rn \c\- 


Dollar eases as D-mark firms 


The US dollar weakened 
yesterday In response to 
renewed strength by the 
D-Mark, though trading was 
quiet as dealers waited Ear the 
Federal Reserve's Tan Book, a 
compilation of economic sur- 
veys from the regional Federal 
Reserve banks, which was 
ieleaed after the London mar- 
kets had dosed. 

The dollar opened steadily in 
London. Insltutions sold dol- 
lars for D-Marks, but this was 
offset as some dealers squared 
their positions. During the 
afternoon, the dollar began to 
fall after the US Treasury 
Under Secretary, Mr David 
Mulford, said that the dollar’s 
10 per cent decline against the 
D-Mark since the Group of 
Seven’s last meeting in Sep- 
tember was not an alarming 
adjustment 

The dollar closed in London 
at DM1.7650, compared with 
DM1.7760 on Tuesday. It also 
finished at Y143.80 from 
7143.70; SFrl.5870 from 

SFrL5985; and FFr6.0300 from 
FFr6.0650. The Bank of 
England's dollar index fell to 
68.6 from 663. 

Dealers were anticipating 
tomorrow’s release of the US 
November employment report 
Non-farm payroll employment 
Is expected to have increased 
by 156,000, compared with the 
233,000 rise in October. 

C IN NEW YORK 


ESpot 

lmoaib — 

3 moods 

12 metis — 


If the report confirms that 
the US economy is continuing 
to weaken, then analysts said 
the dollar could come under 
further pressure as an ea sing 
in monetary policy is antici- 
pated. 

The dollar was also 
depressed yesterday by the 
renewed strength in the 
D-Mark. It had paused for 
breath at the begining of the 
week; however, the continuing 
political upheaval in Eastern 
Europe prompted investors to 
buy D-Marks, particularly 
against the Yen. The D-Mark 
rose to Y8L55, up 55 points on 
the day. 

The Swiss Franc softened 
against the D-Mark on disap- 
pointment that Swiss mone- 
tary policy had not been tight- 
ened. Analysts said that 
behind the Swiss Franc’s 
decline lay worries about fun- 
damental factors. Switzerland’s 
inflation remains higher than 
West Germany’s while its 


money market rates are lower. 
Mr David Cocker, chief eco- 
nomic advisor at Chemical 
Bank, said the D-Mark was 
threatening to break above 
SFW.9000, a level it was last at 
In March 1981. The D-Mark 
dosed at SFrO.8980, compared 
with SFrO.8950. 

Sterling was broadly steady 
on market relief after the vic- 
tory of Mrs Margaret Thatcher 
In the Conservative Party lead- 
ership election contest. Some 
early haying on the back of the 
result supported sterling, 
though for most of the day the 
pound was on the sidelines, 
moving higher against the 
weaker dollar and easing 
against the stronger D-Mark. 

It closed at DM2.7835 from 
DM2.7900 on Tuesday. It fin- 
ished at 8L5760 from 81.5705; 
SFr2.5000 from SFr2.4965; 
FFr93025 from FFr9.5275; and 
Y226.S0 from Y225.70. Sterling’s 
effective exchange rate index 
closed 0.1 lower at 863. 


EURO-CURRENCY INTEREST RATES 


US Dollar 

Can Dollar 

D. Guilder 

Sm. Franc 

DeaHtiraark 

ft-.Aac 

Italian Lira 

RFr.fFW _ 

B. Fr.CCoR) 

Ten 

D. Krone 

Man SSing 


14 Y# 





Long term Emdaltarx two 
IMS 8h-8% par cm mnliaL 


&A-0dliercm.-itKe,tanfliz-8 , « p* rat; fa* years BA -8 A prrena, ttw 
ten rate an call far US Mias andlJanse Yac ottos. tw dags' notice. 




I-Bnb | ljtoSI 




cmswvra maskettno, kvhouse n CHBnrarKMA wwo. 

SUBSET CU21 S8J,THLjOWi7S75i5. FTMJJW 


GRANVILLE 


SPONSORED SECURITIES 


mUUKLMASEISSI 
£31354 tats per £0 


mQSO.SK lODttl W 180% 


Ms* Lw CtMpaw 

30 2 95 ta. M. lad. Mtamr 

38 25 ieiUnttiMiet 

210 149 BedonCnneCSQ 

125 102 Barton firm QrPrtf (SO 

123 74 Bng Te cfa wlopm 

110 102 BrcMbUI Coer. Pnf 

10* U» BRatttfSbKMwC.CAP 

307 285 CCLGrapOrttoaij 

178 ua cacranir&CHeJW 

225 140 Ceta Pic (5E1 

U0 109 Ceta7J5%PnfCSQ 

7-5 IS Maentl Cp Won - V a tl m A Car — 
5 075 MaeNtSeKottAfaUaaBQe*-^. 

130 119 . ■ ... : 

145 58 JJKtoMCRapCSa. 

322 251 bfahSwmNVUUnitSO 

158 98 Blurt JwMw — 

457 355 SenttHB 

300 270 Tartar A CWUsit 

117 100 TBrtqr&CvmitCnvPrtf 

122 78 H«ttaalfaUta|s[USlM_^__ 

150 106 (Mart Earopobwr Art 

395 353 Vctertauy OnrgCn. PLC 

370 315 W-SYoafes 


0 103 

0 

0 43 

0 6.7 

O 5.9 

0 11.0 

O 11-0 

0 14.7 

0 14.7 

O 7.6 

0 103 

0 

0 . >. 

o eo 

O 13 

*5 

>1 lOO 

0 18.7 

0 93 

0 M3 

0 2.7 

0 93 

-2 223 

0 163 


row 
% m 

31 91 

2.7 153 

63 - 

83 63 

103 

20.9 

43 33 

83 - 

3.7 12.1 
9.4 


6.7 6.9 
13 U3 

63 53 

9.1 98 
31 10.4 

M.4 

33 93 
36 

63 .9.4 

5.1 263 


Stcorithi dtsfanated CSQ Ml (USUI are dead ta sAfaet Is (to rate aad rerrfattarfTfc 
BE. 0tt» wraftios nstri abac are Ml fa sdtfact to the whs rt TSA 
Tfcse Mterttlta an dealt ta strtetir an > matched torfala tail*. (tether bdMflle & Co. 
Umftrt Mr Gtsfflflli Dwtes Ltottnl an Market malm ta them securities 
• That norttM an 4 m* on a nartetad tads. Farttor dntalta mUsMc 


Granville fit Co. Lbatned 
77 ManreO Street. Locdon El BAF 
Telephone 01-488 12U 
Member ofTSA 


GnnvfBe Duvios Utriccd 
77 Maori! Scran. loodoa El BAF 
Tckphooe 01-468 1212 
Member ofTbclSEA TSA 


9-11 GROSVENOR GARDENS, LONDON SW1W 0B0 
Tel: 01-828 7233 ' AFBD member 



<8-2503 I 42.7701 
891426 I 7.90197 
239715 


GOLD 
Time to buy? 

Call for our current views 


II.SIMUr___ 7 

AeorlanSdi. ... 6b 
BeUaaFUaK.. 10V 
DhUKih- 10b 
DetistoMark 500 
NeULCalHhr— 7.0Q 
fitnchFraoe- 101, 
KaHoaUra— 13b 


101, | 7.84372 
13h ( 159231 


CAL Futuna Lid 
Windsor House 
50 Victoria Sum 
London 
SW1H0NW 
TU: 01-799 2235 
Fee 01-799 1321 



























































































































































FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


rm 


'HE 


MMMW / Unn . iR 


TTtlV ft i ml li Ui on 



CANADA 


Stack HVi UjW OmCS^b Mm am HV> l« PMdta 


TORONTO 
+/wj pricer December 6 

AMtonbmalniisnlMU 

BOQAMCAlm 405 40 405 

2283 Abac* Pr SIS M% 19 
15400 Aonkn E SUP, uA 10% 

3884 Mvta En *19 79 19 

317958 Ataui m 2S% 3tt- % 

raowooCtatt *sfa TsJ* 15V- V 

22943 A Barrie* mil 31 0% + V 

1200 ABO It SW% BHl 10% + V 

W7B2S BCE lac *44% 44% 44**- % 

S4S47BCED HO SI Si- 4 

12250 BCE UaU 83*1, 34 34 

2400 BC Sugar A 3T7 »% W% 

6700 HR a *11 TO% 11 

443S BP Cmda *»% aft 20%- % 
127S47 8k Marti CM 33V 33V + % 
asaiTO Bk wscof sis% w% w%- % 
22038 BabDOMI n 88 88- 1 

SB aonmdr A *19 19 IS - v 

30700 Bgour B *14% 14% W% + % 

49865 Bom V dy |u% 13% 13%- % 
1525 B raixta a 322 21% 21% 

16280 Brann A *27% 27 27 

*090 Brirawar 310 310 310 

1705* BC Pham *16% n% 16% - % 
1316 Bnmcor *17% 17% 17% 

500 Brunmk *10% 10% H>%- % 

145040 CAE tt% 0% 0% 


500 Brunmk *10% 10% H>%- % 

145040 CAE tt% 0% B% 

S400CCL B I S10% TO tf)%+ % 

468S0 CxnMar *14% 14% 14% 

BOO CamtoMfl 138% 38% 38% - % 

680 COM Rm 06 86 60+ I 

61550 rump— 1 1 485 445 4804- 5 

3062 C Mof WW 360 305 390+' 10 

6GS0C Pacta* *19% 18% IS - % 

UDOCSPual 255 255 255 

2KXW C Ejproa f 75 73 78- 2 

200 CO fcwta *45% 45% 48%+ % 

80068 Cl 6k COM *33% 35% 33% 

700 C llarcta *14% Mb 14% 

BSGDOCOedenM *18% 10% 18% - % 

2250 CP Font} *36% 30% 30% 

278767 CPU! S2fl% » 20%+1% 

2760 C Roay (7 7 7 

134380 C7i™ A t *25% 94% 25% + % 
16720 CUUI A I *91% 21% 21%+% 
1850 CUTS B 821% 21% 21%+% 
naucunwo 350 340 350+ 8 

4000 Cantor *25% 25 25%+ % 

200 Canon A Sio% 10% 10% 

>50 Cara *17% 17% 17% 

1000 Can A I *17% 17% 17%-% 

OOOCaacadaa *5% S\ »%- % 

2250 Can Caooal * 11 % 11 % 11 % 

7210 CanCao A 89% 0% 8% + % 

KOOCantfdA 88% 6% B%+ % 

HM8 C Ouar lie Si0% »% W% - % 
aOOOOmn 00 75 80+ 5 


40500 Oaapfen *0% 8% B%+ % 

KBOCoSwdl HO 10 (9 

46501 CMrinco *20% 28% 28% - % 
BKCltaHines 300 390 290- 10 
48300 CobmubM * 33% 32% 32%— % 
130 C HQ A f CB% 9% 9% - % 

11600 COA 1VX *7% 7% 7%+ % 

MOO Cnataa Oai 120% 20% 3% 

5041 COOMB SM% 13% 13% 

isocaroyA *7% zrh nh- % 

327751 Corona A i *»% 10 13% + % 

3000 Conn *11% 11% 11% 

BMO Gnm At 67% 7% 7% + % 

2300 Dantaon A 413 05 413+ S' 

9(352 Daniaen fit WWW 

124*5 Darin »% 0% 8% 

M2 At |S% S% 5% - % 

37661 caftan *99 24% 23 

3 D TUD* SIB 1* W 
239)0 Domar SU 12% C% 

200 Jten+gml o *W% M% 10% - % 
6300 Du PBat A S£3% 28% 25% - % 
338 DyNn A 810% 10% 10% 

54640 Echo Bay *71% 20% 21 + % 

183 Empire* I *18% «% tt% 

15800 EnBaU *5% B% 8% 

12425 Equity** A 428 420 425 

5900 FPI Ltd (8% 8% 8% 

8000 Fed M A *14% 14% 14% 

500 Fad PtM *M M 14 + % 
HOMHantag L 813% 13% n%+ % 

WOFCJtyRa >11% n% 11% - % 

700 FMartfiA I SB 0 9 

10043 Fortia *22% 22% 22% - % 

ABO FwSaaan I *30% 39% 39% 

17400 Franco n 117% 17 17% 

3873 QWUlll *24 0% 24 + % 

18742 atactic 480 450 435 

3000 GandnO U% 8% B%- % 

1000 Bandit A 121% 21% 21% 

400 GMfa Yk *11% 11% 1I%- % 
20850 C0UKI8 MB 233 340+ S 

mutantl *5 490 495 -5 
9650 GW Knlgtit *11 10% II + % 

27809 Qranoaa 280 299 380+ 5 

SOOCLOroap ISO 20 20 

500 QW IHaco 918% 18% 18 %- % 
0645 CWI Haa *15% M% 15% + % 
300 Haley *5% 9% 5% 

1303 Hama A *5% 8% 5% - % 

ISO KatvUr KS% 0% 0%- % 

406 Han D 814% M% M% 

*4425 Hans lad 8=9% »% 29%+ % 
55884 Hamto 117% 17% 17% 

975 HoUngr *11% II 11% - % 
20750 Hontara I *11% 11% 11%- \ 
827 H BayMn • SB% 8% B % 

241050 H Bay Ca *52 91% S1%+ % 

51983 knaacaL *38% 38% 3i%- % 

15660 Imp Oil A *39% 50% 56 ♦ % 

200329 mat 832% 31% 31 % - % 

800 tanoptc *9% 9 8 

301*0 Intar CUy 323% 23% 23% 


BOOSnttafKm *44 43% 44 

aatm-Cf? *22 1 22% 23% + % 

flSOtacoAl Pi II 11 

4M0 JMiiaek *10% IS 10 - % 

5283 lam *26% 28% 0%* % 

338894 LB Marti *13% 13% 13% + % 

393U*«ep *21% 21% =1% 

eSBUxanrA *25 28% S - % 

513319 lamia 8 1 SZ» M% » + % 

7X Uur Or B *S% 9% 9% 

i£90 Lamtl A PCl 10% 10% - % 
2S9C5 Lo9ta Co P*=i U% 14%+ % 
3B800 Lonvaat *23 23 M - % 

2833 1133 B *77 Z7 27 

3K75 Mac Kooxla *3% 6% 6% 

43502 Mdsn ri X *12% 11% 12%+ % 
lH3MsftlKVf *12 12 12 * % 

2ZSO uaarJan *17 % it 17 - % 

KWC Magna A t *9% 9% 9% 

1910 Marts™ t * 18 % n't 18 % ♦ % 
anti Mark Raa 90% 9% ®% - % 

2615 Manetac *50% »% U%- % 
19E31 Marao U P2% 12% u% - % 

130 H&xl Qqr 0% 5% 5% 

100 Human *19 10 tfl - % 

£tS4 Uaal Cotp 3t3 310 310 

27257 Hom A I UO% 40% <*% - % 
SCSMIMra *33% 33% 33%-% 

2C7UMEOCM 23C 220 230- S 

43718 Kat Bk Can *13% 13 u% 

4£0Q N Buatneet 52 SO 50— 2 
14430 NtaTtt EM PB% 10% 19% ♦ % 
4350 tana A P3% 13% 13%~ % 

87B33 Ncranda F *13% 0% 13%+ % 

UT347 MsnuMa *2+ 0% 01 

29570 taean 825% S3 23 - % 

2758 More At *24 21 34 

17XM2C4S *21% 21 21 - % 

21673 KorTai *35% 0% 23% 

17M Namsat *7% 7 7 - % 

lmaroraf »% •% s%+ % 

IIMtoraito 111% 11% 11% 

3174 KCMOCD W *16% H% «V- % 

SEfOOcalMBf 0% 9 9 

58nOfMoat%d 390 370 370- 6 

14100 C)RS> f *14% t4 M 

B70 Otluan A I »% 0% 33% - % 

5173 PWA Coip 114% 14% 14%+ % 
STCnPaurtaAt 0% 8% 

3aoo PanCan P (0% 0% 28% - % 

asaPtatm *13% 13% i*%- % 

rasn Pjawl A 1 *18% 18% 18% 

32153 PsnoarM 42 41 <2-1 

Z7ST32 Ptacm Ora *30% 0% 20% + % 
7TO Pew Pal S3 7% 7%- % 

S7CS3 P3W7 Cat ! 1M 15% 15% 

USOFOvrFai *20% 20% 20% - % 

32MPrw.ao 810% 10 10%« % 

HOOCutaOTA 614% 14% 14% - % 

*7423 Raigw **% 8% *%+ % 

i9GC3Rni>xkt *n% 11% 11%+ % 

30 bs Km s *w 33 » 

67773 Rmiunca *22% 22 22%+ % 


Bata Stack Mgk Iw Ctaw Pmb 

10700 RafNP I 13% 0 % 9% 

MS Rk> Aigoni C2% 22 >2 E7% - % 

1ES7 Room B t *99% 9B 99-1 

400 Rotate tit 9 9 - % 

117214 Ravil Onk *50% 30% 50% * % 

36206 RyTiCO §17% 17% 17% - % 

ISSOQSMLSwl P1% 11% ll%* V 

2500 SMC A f 110% 10% 10% 

SttOSatfcHI *13% 13% D%— V 

78302 Sceptre 430 *49 443* a 

330 Scot Ptetr *18% »% M%+ % 

010 sent 1 *13% 18% 13% - % 

SmSsaoaC §M% M% »%- % 
31003Saa*iaRi PCO% 0% 9U%- % 

1835 Sava Can *12% 12% U%- 4 

6ZS SAaaC B I *11% 10% «%-% 

21433 Snail Can *40% 40 «%+ % 

3473J4 ShtriBI *0% 0% 0% - % 

BOOS Sotaham *33% 0% 0% 

11430 S|W Aata t *6% 6% 8% * % 

8039Z5MICOA *0% 0% 20%- % 
17750 TCC Ban *12% 12% 12% - % 

364M Tack B f S2S% 0% 0% 

W0 Tola Mai *20% 0% 20%-% 
1500 Tanuac A *10 13 10 - % 

10110 Tam Un S3 32 32- 3 

7B393 ThomCw *16% 16% 16% - % 

04924 Tor Dai Bk 01% 71% 71% 

2)0 Tor Sun *74% ;«1. ;4 1; 

3530 Toralar B I *35% 35% 35% t % 

0 Total Pal 01% 31% 31% 

34T875 TmACa U IM% 14% 14% - % 
43060 TtCan PL **6% 16% K? * % 

74601 Tilun A *71% 21% 31% - % 
UNTrimne *5% 5% 5%~ % 

2050 Trlxac A f *74% 74% 24% - % 

100 Titan B *77% 774 - 4 

TOO HAP A sta 16 18 

a:» Uiucarp A IS 400 450 

MOO UmpKoO I 405 *n 405- 5 

730 un Cutud *16% »% »%+ % 
21365 U Entunaa *12 11% 17 t % 

7744 Un Coip *39 944 34*2 - V 

44227 Vamv C 26S »1 2SS 

74803 Vfcafpy R 403 <3 4.-J - 4 

1030 Voaotrtl I * 10 % 1 Q% w%- % 

MDOWCBI *134 11% (34-4 
HCWatanod *15% W% »4 - 4 

I7W VfcoasiE *21% 214 214+ 4 
7287 Worn *a% 8% ■% 

HW2 Wttmn *41% 41 1. 41 1 • t % 
140D0Wcndwt A 05 230 758 1 5 

4U0 Aaron Can *23 0 0 

1-No (Dttna ngrat or lainua mono 
■<gkta 


warke; 

0 03 jfco 

~cyner- 

. ,>1 T'3!sl 

Cf 

-■ jJSi 

1 c j-ua- 





Z79LU 4122 

w nuns ornsa 


153201 1232 

arum 0/7/321 

2za3S 1050 
Mpsm 0/4/323 


AUSTRALIA 
AU tiEnane O/lfEO 
AH M.ikao n/liW1 

AUSTMA 

Cwfa AWm 00/12/841 
BELOIUM 
BrosstK SE n/W 


Dae. Doe. Dec. Dbg. 

5 


1539.6 1837.1 16444 1624 7 

60? 3 802 6 A20 7 R14 1 


437.92 <2943 4»M 41637 

6575.49 6664.47 6560.16 655169 


17818 CMH 
3751 CO'S 



CDMthtatnSE (3/1/83) 


RYSEtamndtc 

19319 

194.07 

19366 

19130 

Amot MU. Vihw 

37488 

37466 

37538 

57334 

NASDAQ ConpeUtC 

45835 

45328 

457 JO 

45669 



(900/89) 


M ii ^ ■■■■■ 

Ul 



19934 

4.46 


mom 

397 . 0 ) 

( 25 / 4/43 

2931 

Haag Stag Bwta (31/7/64) 275639 2764.44 2767.46 2756.90 

00/10/89 

485.73 

rmrw 

54.87 

IRELAND 

EEQOmaU (4/1/88) 1732.79 1719.90 171238 170395 

mom 

□1/10/72) 



4179(4/11 

97507/2) 


Do* UtakrW Dk. YMf 


NEW YORK ACTIVE STOCKS 

Stacka Closing Ctung* 
Tuesday 1 traded price on day 


Frit Inmate 2J35.700 53% - % 

IBM 2216.700 99% + % 

ferink Id. 3.993,700 18% + \ 

Oitk K 3840.400 3% - 1 

pwnp Morris 3799600 42% - % 

CSX Corp 3773600 36% - % 

IMrtarH. 3703.900 3% 

Onran 364a800 70% - % 

Turkish tar 36X6JOO 22% 

Cca Electric 3528,400 63% + 4 


Nov 17 year ego (approx.) 


Nov IS year ago (approx.) 


TRADING ACTIVITY 

f Volume MBItona 

Decs Dec 4 Dec 1 


Her Yota 154440 150360 199200 

Atm 12348 12209 13103 

HASDAQ 132024 UV7BD 1384*7 

tone Traded 3976 3975 3979 

Has 660 804 3004 

Falk 834 698 509 

Unhanged 492 473 466 

Not Highs 92 112 ICO 

New Lm 41 47 38 


Beaatta.ltM.Q972) 66787 667.98 670.21 6S7Z7 

JAPAN 

Mkfet 06/5/49) 37654J29 3749437 37303073713268 

TakyeSE (Tepid (4/1/60 2867.32 2850JB2 2837.73 281963 
2nd Section (4/1/69 3754.1& 374459 373332 371433 


NORWAY 

Oslo SE 12/1/83} 640.18 

PHtumes 

MaclB Cone (2/1/89 W 


nitfiAronr 

SaaHi Tiro ltd. (30/12/66) 1443J3 
KMltlt AFRICA 

JSE GoM Qfl/9/79 2U60* 

JSE lotestrial C8/9/7B) 2659.0* 

SOUTH KOREA** __ 

Korea (tap Ex. 14/1/801 883Z7 

SPAM 

Madrid SE 00/12/89 M 


336931 336632 3357.11 335324 39192 0/9) 32073 0/1) 

393984 395266 395865 394277 40378(6/10 33503 (6/D 


THAILAND 
ELingkot SET 00 / 4 / 75 ) 


W 77328 76914 



TOKYO - Most Acthra Stocks 

Wednesday December 6 1989 


StacAa Closing Chanoa Stacks dosing Change 

Traded Prlcae on my Traded Prices on day 

Suwitarao Aft tad 83 in 830 +7 DfC IBOm 887 -7 

Kobo Stoat 34Jro B70 +15 MtWul E&S 18Jm BBS -7 

NKK 235m 842 -10 MMcatsu 136m 833 +32 

TosMta ItLBm 1620 0 WtoeWZomm — 136ni 06(1 -VS 

MpponStota ia*n 840 -7 ICmmsaM SUM - 126m 890 -7 



Travelling by air on business? 

Enjoy reading your compl im entary copy of the Financial Tuaes when 

you arc travelling on sdredukd flights from . . . 

. . . AMSTERDAM 

wiihBailiata Airways, British Midland, Canadian Pacific Air, Finnan, 
KLM, Lufthansa, Paa-Am. SAS. Singapore Airlines. Thai Airways 
International . Tima via 

.. .ROTTERDAM 

wiihNLM 


FINANCIAL TIMES ] 

I l/«C«l 1 ■UlINi 11 III BVANI £ 




t Keep the world 

in focus. 

For many executives that could be a daunting 
/ere it not for the Financial Tunes. The FT has breadth 
th of vision, an eye for events that are often in shadow and 
the ability to provide sharply detailed analyses. In short -it keeps track 
of a global economy that T s in constant motion. 

To order call 1-800-344-1144. In Canada 1-800-543-1007. 

FINANCIAL TIMES 

14 East 60th Street • New York, NY 10022 USA 

































































































































42 




FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


3pm prices December 6 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


wgm 

12 Kami w»* _ 

WBh law stock Dtr. V±B IHOrtSgh lorn Quote Ckoa 

a - I32z"w7 3 5% SB - * 

11. ft 9* 9% »% + % 

11. 440 nil 11b 11% + * 

12. 394 0% 8% #V 


782 111* 11% 11% 

S oil b% + 


Bi2 


9 1 0%+ % 

. 18% tt% 

18 ZJ WJ 3% 3% 3%- % 
9 1377 4* 4% ***+ % 
10. 30 19* 19% 


m 


BTO32 68* 

a 2si 25 

tt? 3* d 3 
&9 08/ 54* 3J 

4 SB 193 
2X1 19 1720 80 >4 BB . 
13 IS* 1SV 




18 

II. 


01 19% 18% «%+ % 

247 12% 11% 12%+ % 

B IB* tt* »%- % 


37% 32% AAR 
9% 8% ACM n 1.01 
11% W% ACUta 1J8 
10% B ACMU nl-01 
11% 10 ACM Set JO 
9% 8% ACMSp 1.01 

10 1l% ALLaD .12 

4% 3% AMCA .12* 

B% 4% AM lea 
33% IS AM la pi 2 
107% 51% AMR 
27 » ANR0247 

6% 3% AHX 

57% 37* ASA 3a 
30* 15% AVX M 
70% 48 MAJbT.40 
10% 13% AMU fl 1 

13 7% AcmeC AO 
9% 3*AeneE J2 

38% 32 Aeon 
15* 12% AttaEx 2.08 b 
12% 6% Adobe 

19* 10% A dob pi 1.84 
21% 18% AO* 0240 
10% 7% AMD 
35 28% AMD 0 3 

10% 0% Admit .TO 
S2% 46 AetrU £70 

14 11* Aim 34 

25 15% Asmara J9 

3* 2% Alleen 

48* 39% AbPrd 1J5Z 
39% 18% AUhPrt J50 
25% 14% A»SM 
20* 18% Airiaam 2.40 
10% 8% AUP OP* 87 

103% 93 AMP 0 9.44 
S3 00 AMP 0 8.16 
91 M* AMP 0929 
30% 18* WekAJr 20 
23% 14% Albnytn AS 
93% 32* ACxrlO A8 
41% 25% ABCulA X 
60% 36* AISBJl 30 
25% 20% Alcan a 1.12 
36% 03% AlcoSU .84 

34 22* AbuAlx 1 — _ ... . 

103% to AtogCp 1.631 V7 12 4 98% 90% 96%+% 

235 * 


5 21% 21% 21%+ % 

548 7% 7* 7* + % 

n 1 2 30 29* 30 + % 

UD H» 

AS TO 2112 61! 

£1 1574 

41 93248 19 ... 

6 2 % 2 % ?*- % 

£911 589 48% 48 40%- % 

19 19 78 37% 37% 37%+ % 

14 S3 24% 23 24% + 1 

9.1 
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89 2200 82 00* 92 

£4 2100 60% 83% 80% 

3 0 304 24 23% 23*+ * 

19 12 12 19% 19% 19% 

920 58 45* 4S 45-1 
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49 63086 23 22% 22* 

£5 12 340 34 33* 33% - % 

39 23 422 33% 33% 33%- % 


30 29* 30 + % 

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12%4II% 11% - % 

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48% 48 48%- % 

37% 37% 37%+ % 
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11% 0%ACUR 90 9911 23 9 8% 6% 


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39* 2B*Am£xp 92 
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I 



FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


NYSE COMPOSITE PRICES 


12 Moon- Hflk 

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0% Zteawn 58 05 


20 18 100 38% 37% 37% — % 
02 334 12% 12 12%+ % 

1280 9% 8% B%- % 


41246 4! 

45 3 953 22 
3218 999 
3512 0302 
10. U8 
67 634 62 

13 <31 10 
5 21 11 



33% « UnO pM50 
19% 12%Uiiem1529 


SO 


81 81% I 

18% 10%lMTu 
' ‘ 13 UMMP 44 

30% IftlHn t 
54% 31 iMbypOJS 
3% 11 - - 

21% re%UAM 
17% 12% UBraadi 20 
33 3f% UMum 232 

llVUoMad 54 


ZJ M 
26 M 
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195 l> 
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Baton Dfluran at* unomcial.Yaarty Mghs and tom round the 
pmtoua 62 meka pka the currant wmfc. but not Ore totott 
tnaOno day. Wlm a *p(lt or dock dMdand amounOng ta 26 
percent or more hae Man paid, the year's hhgtvonry range and 
dlvktond art ton tor ttw naw atock only. Untena 


noted, rataa el dMdand are annual dtabummeoa based on Die 



a4vktand also abaM. bnnnual rata at dMdand plus stock 
dlvktond. e-Aqddrtng dMdnnd. ckHtelled. d-mw yearly tow. 
»-*>M»nd doctored or paid In preceding 12 moratis.g4lvidatid 
In Canadian (undo, subject to 19% rnr+raslctanoa tax. VdMdend 
dndaiad after spUt-up or stock rfivtdend. ^dtvtdond paid tate 
year. omWad. dafarrad, or no aetton taken at latest dMdand 
gto a d ng . taMtand declared or paid Ms year, an accumulative 
teaue wlte dlvktonda In arrears, rwiew taoue In tee past 82 
mak*. Tire high-taw range begins with Dm atari oi trading, 
nd-n tt t day delivery. P/E pri c e a aminga redo, rtolvktotul 
(teetered or paid In procertng 12 monthsjiiua stock dMdand. 
Mtocfc apOL DMdanda begin with date of splIL atomlea. 
HHvWend paM In stock to piac e d to g izmonths. oe« mated cash 
walus on aa-dhrktond or ax-dteirtouuon date, ihww yaarty high. 
iMraang hatted, v+ta bankruptcy or racdvoiahip or being 
reotg awaa d under tba Bankruptcy Act or securfttaa assumed 
by eueh enrap an to e . adtUubuud. wi whan Issued, ww+nn 


warra n te. x+ur+fividertd or ex+ftpite.' xtfte-mHltstrtoutton. xw- 
wttltoul annua, y-exrdhrtoand end sales IntuH. yfd-ytoM. 
' i to luD. 


AMEX COMPOSITE PRICES 


3pm prices 
December 6 


Pt Ha 


Mock Dtv.E 100* 

AT6E Ml 

ait nsaoa ta 

Actao 3 12 

AirExp W 4 

AUMW 18 

Attn 79 M2 

Amur t 7B 

Alnbato 04 38 

00^4 

AmdN .10 0 2711 

Alarael JMe 11 9 

AVtzeA SI ■ 32 43 



N ! 


17 17 38% 34 
7 7 28% 38 

7 84 27% 27 

8 33 18 17. 

170 % 1+16 

17 10% 10% 

, d-d - 


re 2 4 


t323 M, 

fl ft ft 

_ +M d % 
27 7 2% 2% 

15 4% 4% 

E-E - 


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rre -18% 17% 


»%. 


6 .. 

383(78 ... 

17 38 12% 12% 
3*3 % +« 

984 9-U Vi 
Z13B83 4 ft 
151 2% 2 

» 2 re% 

. F-F - 

W 8% »V 
«8 M% 

9 re 25% 25 ! 

94 184 44% 44% 
U 18 13% 12%' 

102008 M% 13% 

2B5 2% S% 

. Q — G — 

32 ft 4%. 
0 SB 3% 1 : 

w are 27% a% 

& ft ft 

11 43 42% 42% 
13*4 7% 7 

4 226 B-IB 7*M 
_ 6% 8% 
IS 53 28% »% 

ire rev is% 

• H-H - 
7 108 
13 Mil 

13 SB __ 

3 211 4% 4% 

tt 11 10% 10% 
MO 1% 1% 

«H ft ft 

7 B1 9% 28% 
927 7% 7 

re 182 33% 82% 
33* 7 8% 

a reo i% i% 

7 81^9 9% 

■tt 770 5% 6% 

M 1 8% 8% 




hnpOB g150 


aw 


buoy g n 

tetrmk ,12b 


710 51 fiOV 

12 SOS 1% 1% 

18 2% 2% 
1 » 2 V 2 % 
son 20% 20 
_ 10% 

11 302 

13 5 



11 ft ft 

57 8% 3% 

1 2 X 2 * 

27 138 8% 6% 

22 31 11% 11% 

- M-M - , 

811 u 2% 1% 

2 385 5% 5 

M % «■« 

47 17 18% 18 
7 980 48% 47% 
1TO 33% 32% 
13 2% 2% 

M 403 7% 7 

18 3 7% d 7% 

08 m 19 18% 

3 18 9 

13 20 8% B 

“ H ~ H “ 6 8 % 

s g 

s a 


141142 Z7% 28% 
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12 088 10% W% 
M MB 17% 17% 
1 9 1ft 1ft 


22 332 34% S% 


31 383 U% - 
B 38 »% « 
14 18% «% 
131419 18^ 17^ 

11 250 11% 11 

8 8 % 8 % 


■+18 


PndCre 


Pt Ota 

v.E lOte Mrt 
B3 6 

re e <% 

14 9u 8% 
13 33 0% 

- R-H - 


Lear Cl aae Cbag 
4% 5 + % 

4% 4% 

8% 8% + % 

8% 6% - % 


HOW 

ftoCap 


11 » 6 % 
19 14 1*4, 
25 8 19% 

Roger* .12 41 20% 

Rudlcfc j40b 13 T3 28 

- 8-3 - 

2 8 8 % 

02 M M% 
3122 

13 842 U% 
3 2S 4% 
23 118 11% 
0 8 2 % 
12 85 9% 

W % 

- T-T - 


6% 5% — % 

14% WV+ % 
«% «%+ % 
29% £5% 

27% 27% — % 



8% 9%+ % 

M% 14% - % 
118 122 +7 

M% M%- % 
4 4%+ % 

WV «%+ % 
2% 2% + % 
8% — % 
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eV 

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ra 


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HE 

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TabM SO 
TandyB 
TeOU 56 

Tetotok 

Tea*>C 50e 

TaxAlr 

Tbotind 

Ttrtas 

TeBPtt 50 

TaCry 

TittUK 


228 1% 
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20 23 14 
16 171 21% 
122 254 42% 

3% 


1 % 

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21 % 21 % 

42% 42%+ % 
3%+ % 


1% 

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108 13% 13% 13% — % 
988 12% 12% 12% 

158 5S M 13% 


24 2? IT 
10 *8 27 


14 + % 
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36% 27 


Untaeip 3B\ 

UfoodA 

UFoodB 

US Can 
UnvM 


VaJFrg 58 
WengB .12 1 
wangC 5ft 
WafM 154 


WttUm 
WeKMDTB 
WAteBc 50 
wraoM 
WHET 140 


33 20 

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20 MD 

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114 

32 

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6% 

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28% 

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8% 

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T8 101 

19% 

18% 

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19 5 

11% 

M% 

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ITK+* 

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$ 


43 


Cb-g* 


ID 23V rev 23V + % 

37 10 9% 9% - % 

64 2% 2% 2%- % 

529 TBS 30% 35% 39%- % 

iin i% t% l%+ % 

22191231 22% 21 21%+ % 

14 23 300 67% 66% 67%+ % 
U 13 1781 73% 13 73 - % 

3.1 HI MS 92% 61% 52% 

2531 878 81% 00% 81 -1 
1 41 41 41 

5.122 W0 17% 17% 17% 

77 438 0% 6% B%- % 

2311 45 13 12% 19 + % 

Mil 78 38% 36 »%- % 

M X a 24% 28 . 

311 n 3 12% T2%+ % 


NASDAQ NATIONAL MARKET 3pm prices December 6 


*W «*. 100a Mgb UrW L eattfb pg Stock 


MW BO 
HOC 
ADT 
AtC b 
ASX 
AST 

Attaints 
ACAteSt 
ActARt t 
An tom 
Atari h .10 

Adept 

Attngi* 

AdtoSv ,14 

Adobrt .!« 

AfhCir 

AdUKSV 

AdvPeiy 

AovTei 

Advarne .IDs 

Adrasy 

AfBeh 

AgncyH t 

AtrMd 

AkWhc i 

Atom .W 
Also I .*4* 
Akta 

AlexBr St 
Atauffid 50 
Aide £0 
AiagW 
AHsnPh 


27 439 27% 28% 27%+ % 
15 139 17% 17% 1?%- % 


9 ft 

S3 


10 29a 

187 

10 1897 . 

SO* 10% W 
xa r 
S 58 W'_ 

13 Ml 8% 
re 20 22 

1512309 5% 

21 ^3 19% 


“.tt \ 
Wi 


8% 

22 

re 1804 15% 15 
K 4 £4% 24% 24%+ % 
M SO 19% 18% 19%+ % 

tt ¥l\ 

5% ‘ 


B%+ % 

22 

5% +3-18 

t5% 

re - % 


94WSs 0% 
» 31 15 


17 427 18% 

188280 10 

24 584 8 

32 170 11% 

U 1374 13% 

18 82 4% 

32 212 W 

18 83 m2 

590 33% 

12 224 M% 

S* 98 11 

8100* 37% 

25 188 31% 

8 $ 6% 

626 11% 

136 5% 

27 5847 11V 

V 102 8% 

JS ** * 

AFTxE U0 
AWAM 

Aflnkr SO 11 344 12% 

AraClty 904 m 18% _ 

ACreel 58 23 1005 34% 33% 34%+ % 

Amtotg 8 9099 B 6% 8 B+W++18 

A**S 33 917 13% 


Altests 

Altera 


»% 

... . P .. . 

69 90% WV 30%+ % 
440 10% 0% B%-1 

13 274 13% n% W%+ % 

“ * 12 ' ‘ 

18 



ia%* % 

n%+ v 


ANtoe 150 ID 32 K% 36% »%- V 


12% 13 


10 ‘ 10 

17 17%+ % 

21 % 21 % 

. 8 8 

88 1848 48% 48% 48% - % 

... 


13 W0 18% «% 
sa *90 iiv ii% 
lire ft s% 


36V 

57' 

3 

S'_ 

9% 


11% - % 
3V+ % 
2«V- % 


98 + % 


ft- % 

tt + ^ 


AmPec 40 ia 10% 

APwCa 19 9U 17' 

ASott a 52 20 128 21 

AmSU 12 ii 

ATvCm 
AmTrav 

NWCp.Ur S9 

AmRBh 

Amortr 158 8 WEB 27 

Amgen 2091 38% 

AmskBk jot 375 4 

Amai 50 19 134 8 

Antogic W 190 9% _ _ 

Army e 58 W W 17% 17% 

Ansngol 150e 5 333 UV 13% 15V * % 
AncbSw W49 2% dl 1+W 2 

Andrew H 2ET 25V 25% 23 

ApogEn 50 17 57 17% 17% 

ApptoC M 12 34088 49 % 41 42% -1% 

Aptoboe U « re 13 - % 

ABknd 24 71 91% 91% 9i%+ % 

ApWBto 19 424 23% 23% 23% 

ApIdMt B 927 27% 28% »%- % 

ApidP a .12 M 741 21% aa\ 21% 
Aratove W 176 11% 11% 11%- % 

Arbor a .W 20 99 £0% 30% 20% 

ArgoOp 1 5 34 0% 88 6BV+ % 

ARIX 6 2S 4 3% 4 + % 

ArtZtaM 50 Ml 9% 8% B%+ % 

Armor 54 M 747 21 19V TO%-1% 

Arnold 1 11 4 31% 31% 31% — % 

Artel 393 7% 7 

1501 11% 10% 

27 35 


5? 


iY-i 

Adunan 58 20 15% U% 15% + % 

ABSaAr .40 7 120 15% 15% 15%+ % 

AMOOd J3e 19 12 as 9*% 3S * % 


AsCmS.a 


35 » 


»% - % 


BAA* 
BHAB8 
BUA 150 
BMC SB 
BSB Bep 50 


Autodk 150a 20 1922 30% 

Awttok 4983 4%d 3% 4 - % 

Amdta 42 34 221 14% 09% M - % 
- B-B - 

B88T* 53 10 10 22% 21% 21%- % 
BEI El J22e 5 27 0% ■% 8%- % 
20 25 18 17% U 

10 18 18 18 + % 

8 114 37% 37% 37%- % 

27S2S 20 27% 27% - % 

6 00 17 16% XT - % 

28 107 9% 8% 9%+ % 

18 387 20% 19% 16% — % 

2* 10 U% H% 18% 

13 22 47% 47% 47%+ % 

0 54 21 % 21 % 21 %+ % 

10 387 56% 86% 55%- % 

IT 134 Mj 14% MV- % 

9 12 12% 12% t£%+ % 

12 2 78 18 78 +1 

12 981 12% 12 12 - % 

9 32 ZlV 3% 23% 

2 8 % 8 % 6 % 

18 64 36 35% 35% - % 

8 209 28% 20% S% 

8 1510 98% 30 30%+ % 

29 323 15% 15% 13%- % 

12 37 11% 10% 10%— % 

10 212 46% 45% 40%+ % 

17 380 66% 57% SB - If 

U 138 12% 12% 12% 

90 297 15% M% 15%- % 
808 1233 u18% 17% 17%+ % 

M2 32% 32% 32%+ % 

31 G39 28 2S% 28 

« ft ft 9V- % 

14 194 37 38% 98%- % 

ssi? si 5 
0 » ss? 

7 aa a s% t + 

M 1 28% 29% 2BV+ 

32 277 92 *1% 31 J - 


BekarJ 56 
Batent s 
BncPac 150 
BoPap t 50 
BepHw 4158 
Benaoc 
BkSou 48 
Bkkws 1 
BkWorc 1 
Bente 5B 
BasPtrs 
BWF la 
BoyVw ,19a 
BayBk* 150 
BoauC xlOe 
Baebarn 50 
BetMey 40 
BabLb 150 
Big B .18 


Slogan 
Btoge [4 
BtenMia 
BtzMfl 
BlckD JOb 
BaaiB a 212 
BoCEvn 50b 
O eke eig 50b 
BendP 
Boa to6 
BooSe 50 
BOMFB .72 
BradyW 50 

Brand 

Brunos .M 24 1275 M 


Budere 
BuHdT 
BumpS 

BurrBr 7 

Budrllf 20e 7 IS 

Bytex 16 87 

- C-C - 


14% 141 


252551 14? M% 14% 

24 0% 9% 9% 

U 270 17% 17% T7%— % 

_ “ 4% wi tt: i 

9 8% 8% 


CCOHa 

caia 

CPS* 58 
CTEC • 

CdbyS 159* 19 324 »% 



11 81 13 12% t2%- % 

18 16 9% 0% •%- _% 

12 61 39% » 

39 25 26 “ 

SB 1 

19' _ 

7% 

41 

tt 

19 



Certagtn 


28 ID 82% 

40 79 17% 

5 08 4% 

W 007 23% 

28 U8 11% 

“ 814 28 

188 W% 17% 18% 

M 34 20V 8>V 18%— % 

1821 am w% 10% — % 

aa 


CBriCm 1570 W SM 28 27% 27%+^^ 


2823 4BV 30% 40 - % 
0 107 7% 7% 7% 

271191 16V 19% 18% — % 
170 23V M% 23% - % 

7 45 M% M 14 

8 70 32 % 32% 38% — % 

9 26 22% 21% 21% — % 
18 13 25% 28% 26% 



17% 17% - % 


«& 


22 111 13% 0% 13% 

18 22 »% 18 18% + % 

1140 7 0% 8% 

7 9303 18 17% 17% - % 

W70 31% 30% 31%+ % 

28 2500 18 17% 17% - % 

11 11 00 79% 80 + % 

40 B3 0% 8% 8V+ % 

27 215 44% 44 44%- % 

7« tt tt w4+ i 

71 23% 21 a%- % 

9 8 25% 25% 25% 

8 88 9 % 8 % 0 %+ % 

£3 08 45% 44% 4ft- % 

23 30 42% 41% 41% — % 

12 115 24% 23V 24 + % 

207 u 0% 0% 6% + +16 

« 7S 30 29V 30 

28 17S2 12% 12% 12% - % 

38 5077 ®% 5% 8% — % 

14 1501 20% W% » + % 

104 83% 29V £3% 

24 2D 20% 2D V 20% + % 

19 78 18% 16% »%+ % 

IB 775 14% 13% 14 

40 170 U 17% 17%+ % 
7 811 9 0% 8%- % 

12 13 22% 21% 21% 

34 172 18 17% 17% — % 

395 0% 8% 0%+ V 

WOO E0 16 14% 16 + % 

0 31 12 11% 11%+ % 

3204 W% »% WV - % 
1642 16% W_ 16 


Camodc £40 11 218 GOV 40% 48^- % 


8 27% 37% Z74 


88 47 «% 45% —1 

£1% - 



% 

7, » . 
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11 % 11 %+ % 
6% 8%+ % 
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28 28 — % 
12% 12% - % 
M% 15 - % 


1W3 30S 2S% 22% 23%+ % 
25 86 11% «% 1*% “ % 

CooraB 50 22 S21 21% 21% 21% 

' lit — 


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44 15% 15 15% 

9 1132 43} 43% 43% + % 
44 4% *% 4%- % 

80 232 14% 14, M%+ % 

32 120B 31% 31% 31% + V 

31 24 17% »% 17% + % 

20 087 27% 28% 27 + % 

8 MS 20% 28% 23% — % 

7 387 7% 7 7 

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W ft I 6 - % 

10 287 20% 20% 20.%— % 

33 282 11% 610} 

8 155 16% 

444 6% 

- D-D - 

25 KB 7 8% 6%- % 

8 15 K% 15% «%- % 
15 54 13% 13% ttV- % 
12 US 22 31% 21%- % 

9 091 14% M% «%- % 

2934 

10 180 
6 1501 


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mo% n% , 

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DM. 

Datt< t 16 68 13' 

DSwtcft mi 

Datecp 17 80 33 — _ . 

Daoptoi 1.42 IB 17 32% 81% 32% 

Da4»Sta 58 13 2* W% 13% 

DaUbE .We 19 101 32V 31 

17 38 035% 

16 » 27% 

15 248 6% 5% 

11 190 18 15% 

44 038 12% o4 

77 3*2 17% 18% 

W 25 34 23V 

281809 30% 

8 M3 11 
18 1188 25 _ 

10 520 W% 14 

18 211 10 

8 1144 31' 

14 2SB2 11% 11% 

34 217 7% 7% 

17 48 28 % 3 

W 0% 8% 

28 440 47% 47 
19 2058 3% a 3% 


Wgk Uer iwCig Stock Uk. 1 
2% 12% 12% + % . Kmtae .40 tt 48 


3'* - % 


Demon j*5e 
DUttn AO 

DeUCpl 
Dawn 
Dtagns 
DteiH* 158 
DIbrai ■ 58 

ague 
DHneFn 50 


15% + % 

3%+ % 


DaJeYr 5B 
DWW JO 
DomOk 58 
DibuB 
Orezir 
DrayOr 
DrugEtJHe 
DmXQn 50 
Duramd 
Dahm ■ 58 
Dtirfil M 

Bidyf ■ 
Dycam 

Dywcn 

Dyadic 


W 2» U 


» 28 31% 31% 21% - % 
31 R 30V 29 29%+ % 


Ed 1*1 

EFEla 


13% 13%- % 


ERCEn 
Egttd 
EaeeeT 
EaMFn 50* 


Etsbaad 

ElPee 5ft 

Ban 

EkStt 

EhixAfi 157* 
EJctmg 
EmCee .88 

Emu In 

EnekO 58 
Encore 

EiJtBcp 1JM 

Eons i.os 

EdcTI 153a 

EvnSU 


re 4ti is 

a 707 a 

M 127 W 
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M 110 3% 5% , 

17 a 14% M% M%- % 

W 37 10% WV W%+ % 

81 17 18% - 

158 7 ft 

392 11% 611 
801 5% 4% 

795 12% 12 
1013 



__ _ B%+% 

43 474 10% »%»%+% 


• V 

8 58 41 
15 734 8% 


ExcoiBc 58 
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EXTON 
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HIP 

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FmM 


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FkfFTa 50 
FIAT 1J2 

ftggtoA 130* 
FW4M 
FWfM 
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FAleBk 54 
FttAm 250 
FtABcp jq 
FAFnA e 
FtATn 125 
FBOh 150 
FChet 52 
FCaaiC L20 
FtConet 55 
FlEata L12 
FiEem 52 
PEAK I 
FEx prttfO* 
FEx pff250 
FEa ptQI.EB 
FEx pm 
FrFdUtc 50 
FVbCp 54b 
FtfeMg .10b 
FIHbw 150 


- % 

I 41 * V 
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'lk-X 

73M 3% 3% 3% 

237 10% WV tfl% 

11 378 31% 3D% 90% 

8 88 31% 31% 31%-% 

710 U192% 131% 137% *2 

45 052 24% 3% 53% + % 

8 MSS TV 7% 7% — % 

8 350 7% 7% 7%+ % 

14 67x23% 23% 23% 

75 383 4% 4% 4%+ % 

15 IS £7% 27 £7% 

- F-F - 

£1 474 47% 43% 40% -I 

1 39% 30% 39%+ % 

33 14% 14% 14% 

36 70 28% 20% 39%+ % 

WO 14 13% 13%- V 

ID S3 »% 20% 30% - % 

12 95 52% 52% 57V 

40 89 86 67% -1% 

125 264 W% 0% W + V 
40 337 7 6% 6% 

158 124 M 13% 14 + % 
0 *50 17% 17% 17% 

7 380 «% 47% 40%+ % 

800 l% 1% 1 V - % 

13% 


33 2 19% 19% 


11 960 20% 21V 20%+ % 

3%- % 


FMM JZ 
FMom 50 


FPtoFn 
FSocC 158 
FTonn 150 
FMMd « 
Ftomw 
FtegFli 50 
Fig Min 


FhHcb 50 
FdLMA .10 
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For Am l.ga 
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FortnF 50 
RthFn 1.08 
FrtCpt 
FrnkFat 52 
50 
t 

fulrHB 58 


W 41 32 30% 

11 5 21 20V 20% - % 

11 18 £9% 23% 23% 

37 2909 17% 17 17% - % 

W « 31% 91 31%+ % 

0 40 7% 7 7 

60 12277 10% 10 W%- % 

127 U 16% 13% 
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298 14% M% M%— % 

W2 13% 13 13 - % 

34 OK 14% 15% 13% -1% 

8 42 17% W% 17V 

17 390 »V H 36V 

M 20 92 % 52% 92% 

10 1SB 0% 9% 8% 

03 107 22% £2% 22V- % 
8 « 6 0 % 6 + % 
19 21 34 23% 3* + V 

40 128 11% 11% 11%+ % 
W 82 » 90% 37 -1 

.10 OB 32% 32% 32% + % 

M 1333 28% 28% 2S%+ % 

30 217 13 12% t£% - % 

18 83 23% 22% 23%+ % 

6 29 14% U M%+ % 

3 795 3% 3% 3£~ .% 


17 W8 13% tt re%+ % 


28 1801 11% 11 11 - % 


re 


oa 11% io% ii 

61 34% 34 34 - % 


70 14% M% K% 

17 31 MV M% MV- % 

83 128 18% 18% W%— 1 
12 15 29% 28% »%- % 
7 184 5% 4% 

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81 803 25% 24' 25%+ % 

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i2 1151 # 4i% tt: i 

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273 ££% 

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34 317 18% 18 18%+ % 

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Tecum 3.20a 
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730 9 

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44 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Thursday December 7 1989 


AMERICA 


Dow slips in wait for jobs statistics 


Others pay for West German surge 

Alison Maitland analyses last month’s European turnover figures 


Wan Street 


DULL TRADING continued on 
stock exchanges yesterday as 
dealers maintained cautious 
positions prior to tomorrow’s 
November employment figures, 
writes Janet Bush m New York. 

At 2 pm, the Dow Jones 
Industrial Average was quoted 
£83 lower at 2,73485 in slow 
volume of 94m shares by mid- 
session. The Dow had lost 1185 
on Tuesday to 2,741.68, ending 
a run of three daily gains 
which had taken the blue chip 
Index to its highest closing lev- 
els since the mini-crash of 
October 13. 

The only economic news yes- 
terday was the publication of 
the US Federal Reserve’s latest 
Tan Book of regional reports 
on economic activity. It offered 
a similar picture to the one 
painted by the last report - of 
sluggish economic growth and 
subdued price pressures. The 
report said that there was con- 
tinuing softness in manufac- 
turing, but that there were also 
isolated areas of strength in 
this sector. 

The report had little impact 
on financial markets, as it did 
not give a particularly strong 
signal to the Fed to ease mone- 
tary policy, but simply con- 


firmed what Is now a widely 
held perception of the econ- 
omy. 

Neither the bond nor st ock 
market haw had any motivation 
to do anything this week, with 
little fresh economic news 
noming oat and continued 

uncertainty about whether 1 the 
Fed will lower its Fed Funds 
rate target to 8% per cent from 
8% percent 

Probably the most Interest- 
ing financial market was the 
foreign exchange market, 
although developments there 
fafiori to spark life in stocks 
and bonds. The dollar contin- 
ued to weaken, particularly 
against the D-Mark, p rovok ing 
supportive comments from Mr 
David Mnlford, US Treasury 
undersecretary. 

In the stock market, technol- 
ogy issues continued to be 
weak. The performance , of IBM 
on Tuesday had been disap- 
pointing after the company's 
announcement of a significant 


restructuring, including the 
cutting of 10,000 jobs. IBM fell 
6% to $88% yesterday, leaving 
it below the level it was trad- 
ing at before the announce- 
ment. It remains below its low 
immediately after the October 
1987 Crash of 5102. 

Among other technology 
issues, Cray Research was 5% 
lower at $38 and Digital Equip- 
ment was down $1% at $86%, 
but Motorola added $% to 
$58%. 

Car stocks continued to be 
sluggish. The Fed's Tan Book 
noted that consumer spending 
on non-durables remained 
quite strong, but was weak In 
durables such as autos. On 
Tuesday, late November US car 
sales figures showed that Gen- 
eral Motors* market share had 
fallen to its lowest level for 
several years. 

Ford Motor slipped $14 to $45 
and General Motors was 
unchanged at $44%, while 
Chrysler recovered from an 


early loss to gain S% to $19%. 

Among featured individual 
stocks. McGraw HUl added $% 
to $63%. A long-time takeover 
candidate, the stock rose on 
reports that it may be consider- 
ing a restructuring. 

Canadian Pacific jumped 
$ 1 % to $22% on news that the 
company plans to spin off its 
real estate unit next year. 

Saatchi & Saatchi rose $1% 
to $13% in spite of re po rting a 
drop in pre-tax profits of 48 per 
cent in the year ended Septem- 
ber 30. This was nevertheless 
better than expected. 




SOUTH AFRICA 


GOLD STOCKS led an 
afternoon advance in Johan- 
nesburg after a quiet opening. 
Positive factors Included the 
stable bullion price, the weak 
rand and d em a n d for 


mining and Indus trial issues. 
De Beers, the diamond miner, 
gained RL70 to B65 80 afte r 
announcing it would proceed 
with its Rl.lbn diamond mine 
development in the Transvaal. 


HEAVY TRADING in Cana- 
dian Pacific and Air Canada 
poshed Toronto stocks higher 
in mirod midsession trading. 
The composite index gained 
118 to 3,951.1 on volume of 
13.7m shares. Declines led 
advances by 249 to 1TL 

Canadian Pacific, up C$1 Vi 
at C$26%. announced the 
spin-off of 80 per cent of its 
stake in Marathon Realty, the 
real estate company, and a 
one-far-one rights issue, in a 
move to prevent any takeover. 

Air Canada gained C$% to 
C$13%. The company said it 
would, sell part of its 146 per 
cent stake in GPA Group. 


A S THE Gennan popu- 
lace clambered over 
and through the Berlin 
Wall last month, the West Ger- 
man bourse rose to the occa- 
sion and celebrat ed wi th a 

s ur ge in trading activity and 

share prices. 

Volume climbed to near 
record levels during the three 
days that straddled the breach- 
ing of the Wall, making Ger- 
many the only European mar- 
ket to show an increase in 
turnover compared with Octo- 
ber, the month of the hectic 
mini- cr ash . 

November began very slowly 
in Germany, with trading lev- 
els around their lowest of *hn 
year as investors struggled to 
find their feet after the drub- 
bing of October 16, when 
Frankfurt share prices plunged 
13 per cent 

After the first week, things 
picked up rapidly, says Mr 
James Cornish of County Nat- 
West Woodmac. “There were 
two enormous spikes, first on 
the opening of the Wall anJ 
the second right at the end of 
the month coinciding with, but 
not caused by, the bombing of 
[Deutsche Bank chief execu- 
tive] Alfred Herrhansen. 

“That somehow did release 
spirits in a curious way. It 


EUROPEAN EQUITIES TURNOVER 


Monthly total in focal cwrr 

ancfw(bn) 


Boars* 

How 

Oct 

Sew 

Aug 

Belgium 

70.0 

89.6 

852 

82.6 

France 

96.4 

174.8 

145.8 

102.0 

Germany 

110.9 

104.6 ■ 

104.5 

115.5 

Italy 

13260.0 

20.010.0 

21200.Q 

27,080.0 

Netherlands 

16.1 

192 

16.6 

162 

Spain 

419.0 

522.0 

605.0 

5782 

Switzerland 

16.6 

20-8 

20.5 

24.2 


VoMnaa npmmi p u re *— — and ulaa. Map and B e l gi an 
Kalian data adjusted to Include op martl e t raffing. Soma ' 
Source: County KAM WoodMac 


started with a ‘let’s show ’em.* 
Churchillian type response; 
then there was a second wave 
of euphoria over what was 
going on in the East” 

The peak of the month was 
on November 13, the Monday 
after the Wall started coining 
down, when DM9.6ta worth of 
German shares changed hands, 
only slightly lower than the 
high of DMKL3bn reached on 
June 20. Then, on December 1, 
the day after the assassination 
of Mr Herrhausen. turnover hit 
DMIObn; yesterday It rfimhed 
to DMUL3bn again. 

Germany recorded a 6 per 
cent increase in volume over 
October. But the momentous 
events there contributed to a 
heavy fall in turnover levels on 


other bourses, which were also 
suffering from post-October 
caution, worries about high 
short-term interest rates and 
confusion over economic sig- 
nals from the US. 

France was the worst 
affected, dropping 45 per cant 
in volume terms. Having been 
fed with strong. takeover sto- 
ries such as Suez-VictaLre and 
Parib as-Navigation Mlxte 
throughout the summer and 
autumn, it was left with leas 
meaty speculation, which 
failed to sustain the market as 
a whole. For a couple of days. 
French bunding materials com- 
panies aroused interest on the 
German immigration theme, 
but Paris spent most of Novem- 
ber shadowing Wall Street - 


The Netherlands had a dis- 
mal month, with turnover tell- 
ing is pet cent. On November 
13. when Germany -was at Its 
peak, Dutch volume shrank to 
FI 455m, one of its poorest lev- 
els of the year. Hie Dutch mar- 
ket took third-quarter results 
from Wessaron, Akxo. and 
Royal Dutch badly and turn- 
over foiled to improve much 
when the insurance companies 
came in with buoyant results. 

Mid-November was a signifi- 
cant time for the Spanish 
boko, too, as the ffeueral fode* 
fell below tire 800 level. Over 
the mouth, volume dropped by 
20 per cent amid signs that 
interest rate* would stay high. 

Italian volume fell by 31 per 
cent as the November “account 
of the dead” drew to a dose 
and the new December account 
proved similarly lifeless. Milan 
was tangled up in its own cor- 
porate swathes, such as Nuovo 
Banco Ambrosian© and Eni- 
montt *"d activity was ftufher 
dampened by bank strikes. 

Belgium fell by 22 pet cent 
and Switzerland by 20 per cent 
County NatWest WoodMac has 
introduced a more accurate 
method of estimating share 
turnover in Switzerland, so the 
figures for the past four 

mnwtha have been revised. 


ASIA PACIFIC 


EUROPE 


Nikk ei bounces back in 
defiance of cooling move 


Eastern promise swells Frankfort volume 


Tokyo 


AN OFFICIAL move to curb 
the market foiled to cool inves- 
tors down yesterday, and share 
prices closed at a third consec- 
utive record, writes Michiyo 
Nakamoto in Tokyo. 

Tuesday's announcement 
that the Tokyo Stock Exchange 
would ti ghten rules on margin 
trading gave the market an 
early jolt and share prices took 
a drop of 139 points in the first 
15 minutes of trading. How- 
ever, three-quarters iff an hour 
later, the Nikkei average was 
moving up, a trend it managed 
to sustain for the rest of 
the day. 

After falling to a low of 
37.299-36. the Nikkei dosed at 
its high for the day of 37,65429, 
up 160.12. Advancing issues 
outnumbered declines by 562 to 
374 while 195 issues were 
unchanged. 

Turnover retreated to 12bn 
shares from the 1.4bn traded 
on Tuesday and the Topix 
index of all listed shares rose 
16.50 to 2367.32. In London, the 
ISE/Nikkei index edged up 054 
to 2,169.15. 

The decision by the TSE to 
tighten margin trading rules 
had little effect, said Mr Chuck 
Lambert at Jardine Fleming 
Securities. The market has 
become institutionalised, and 
individual investors trading at 
the margin are not as impor- 
tant as they used to be. 

At the same time, the value 
of stocks traded at the margin 
is currently at a record high 
level, but this is relatively 
moderate as a proportion of 
market capitalisation at 1.42 
per cent, against 2 per cent 
which would be considered a 
danger signal. 

This is the first time the TSE 
has tightened margin require- 
ments in 10 months. In the 
past, moves to tighten margins 
have come in series: the first 
tends to be seen as a bullish 
indicator for the short term, 
said Mr Lambert; the second 
has a moderate impact; but it 
is not until the third that the 
market sees a real correction. 

The market did subside in 
places yesterday as some big 
steel companies, which have 
risen strongly in recent ses- 
sions, suffered losses. NKK, 


third in volume with 28.5m 
shares, fell Y10 to Y842. Nippon 
Steel dropped Y7 to Y840 in 
active trading- 

On the other hand, Sumi- 
tomo Metal Industries topped 
the most-actives list in 88.1m 
shares as it rose Y7 to Y930, 
while Kobe Steel followed with 
342m sharp*, plowing Y15 bet- 
ter at Y870. 

Attention turned to low- 
priced laggards. Nikkatsu, a 
producer of movies and video 
software, gained Y32 to Y693 in 
active trading. Nikkatsu has 
the lowest price in the first 
section, and has been said to 
be the target of speculative 
buying. 

Retailers were also selected 
as domestic laggards, with 
department stores Mitsokoshi 
and Takashimaya up Y90 and 
Y110 at Y2,620 and Y3.600 
respectively and Jusco, the 
supermarket chain, Y80 hi gher 
at Y3.000. 

Special situation issues, 
especially those which have 
attracted takeover talk, were 
popular. Toyo Sanso, an oxy- 
gen producer, rose Y240 to a 
record high of Y3.790 during 
the day on rumours that a 
well-known speculator was 
buying its shares. It closed up 
Y180 at Y3.730. 

Osaka took tighter margin 
trading rules In its stride and 
the OSE average climbed to its 
12 th consecutive record of 
38,747.18, up 144.98. Volume 
rose only slightly to 119m 
shares from liftism on Tues- 
day. Nintendo, the video games 
maker which is expected to 
benefit from increased demand 
before Christmas, rose Y200 to 
Y25200. 


Roundup 


UNEASY for the most part. 
Pacific Rim markets tended to 
ignore Tokyo’s lead yesterday, 
and concentrate on their own 
concerns. 

TAIWAN tumbled again in 
the wake of vote-rigging pro- 
tests following Saturday’s elec- 
tion. The weighted index 
dropped 41729, or 48 per cent, 
to 8,283.56, its lowest level 
since mid-July, and volume 
shrank ftom NT$92bn to 
NT$6lbn. The outcome of a 
recount agreed by the Nation- 
alist Government is not expec- 


ted until tom or row. 

The market was also affected 
by rumours that the Hong 
Yuan Group, a big stock mar- 
ket trader, has been having 
finnnrfoi problems. The group 
denied this, but four compa- 
nies associated with its market 
activity - China Wire & Cable, 
Oceanic Beverage, Grape King 
and Right Way - dropped by 
the 7 per cent limit lor the 
fourth consecutive session. 

SINGAPORE, on the other 
band, rose far the 16th consec- 
utive session and hit a post- 
1987 Crash high as the Straits 
Times industrial Index put on 
IL94 to 1,443.33. Volume rose 
to 94m shares and S$219.5m 
from 83m and S$260m. 

Continuing overseas institu- 
tional buying and renewed 
local investor interest were 
spiced with takeover rumours 
involving; among others, UIC, 
Singapore Land and Hind 
HoteL Among the day’s tnaiw 
gains were Time Engtepn rin g 
up 48 cents at S$468, and Far 
East Shipbuilding, 24 cents 
higher at SS466. 

AUSTRALIA mostly stead- 
ied. but Bond Corp and some of 
its associates plunged amid 
speculation over their financial 

health. 

The All Ordinaries index 
edged up 22 to L6392 after a 
92 fell on Tuesday as mining 
issues tumbled on a sharp foil 
in the gold price. Turnover fell 
to 93m shares and A$269m 
from 103m and A$20lm. 

Bond Corp dropped 7 cents 
to 14 cents on turnover of 
750,000 shares, while Bond 
Media fell 3 cents to 12 cents. 
Late on Tuesday, publisher Mr 
Kerry Packer, who Is bidding 
an effective 10 cents a share for 
Bond Media, was extremely 
doubtful about the Bond 
group's prospects. 

News Corp led winners in 
the industrial section with a 
60-cent rise to AS1490. 

James Hardie Industries rose 
6 cents to A82.68 on a 30 per 
cent rise in first-half net 
profits. 

NEW ZEALAND blamed 
Australia as the Barclays index 
fell 2128 to 2,05125, In volume 
down to 52m shares from 92m. 
Brierley Investments domi- 
nated trade with 22m shares 
traded as it fell 6 cents to 
NZ$225. 


THE POLITICAL miracle in 
Eastern Europe brought Frank- 
furt back into the van yester- 
day, although other senior 
markets had their talking 
points, writes Out Markets 
Staff. Madrid and Helsinki 
were cl osed for public holidays. 

FRANKFURT broke one 
record, and equalled another as 
it built on Tuesday's afternoon 
rally. A flood of foreign buying, 
and a gradual increase in the 
commitment of domestic Inves- 
tors, took the DAX index up 
32.74, or 2 per cent to a record 
high at 1,65825. 

Volume rose from DM72bn 
to DM10.3bn, equalling the 
June 20 level which was 
believed to be an all-time high. 
The East/West rapprochement 
combined with strong domestic 
prospects and a foreign taste 
for the D-Mark after its rise 
this year. 

The rally was led by Volks- 
wagen, which sparked off Tues- 
day's recovery with its joint 
venture plans for East Ger- 
many; yesterday VW demol- 
ished its DM500 resistance 
level with a DM26.10 rise to 
DM516, and topped turnover at 
DML27bn. 

Bine chips had anntliw good 
run with Deutsche Bank, sec- 
ond in volume with DML07bn, 
climbing DM10.10 to DM740 
and Siemens up DM8 at DM658. 
Mannesmann, third with 
DMl.oahn, rose another DM19 
to DM340 to take its five-day 
rise up to 27 per cent A UK 
broker is said to have esti- 
mated that Mannesmann’s cel- 
lular telephone consortium 
could make a DM4bn profit out 
of the Bundespost deal. 

PARIS showed a solid rise, 
although activity was confined 
to the Paribas group and a 
very strong oil sector. Indeed, 
one analyst said the market 
was really consolidating, in 
spite of the 1 per cent rise in 
the Indices. He estimated that 
volume was down from FFr3bn 
to about FFr22bn. 

Paribas surprised most 
observers by climhing FFr28 to 
FFr669 In turnover of 580,000 
shares, raising speculation that 
the banking group might a gain 
be under counter-attack from 
Navigation Mixte, the target of 
its hostile bid. 

It emerged yesterday that 
Parfinance, a financial holding 
company which is a core share- 
holder in Paribas, had recently 
raised its stake to 5 per cent 
Friendly shareholders UAP 


and Axa-Midl have similarly 
rallied round in recent weeks. 

The OMF 50 index rose 528 
to 53720 and the CAC 40 was 
UP 2L03 at 126029. 

MILAN went nowhere, on 
balance, as it mulled over the 
November mutual funds fig- 
ures and the Ferruzzl/Fondi- 
aria/Galc deal. The Comit 
index recouped early losses to 
close 0.09 lower at 66727 in rel- 
atively active trading. 

Mutual funds, had a net out- 
flow of L255bn in November; 
equity funds alone had a net 
inflow of L83bn. But the funds 
were net sellers of LSSObn, the 
L550bn splitting as to Lioq hn 
of foreign investments, T.isph n 
of bonds and L30Qbn of domes- 
tic equity. 

This suggests that equity 
fund managers decided to 
increase their liquidity sub- 
stantially, which suggests a 
cautious approach to prospects 
for the market 

Trading in La Fondiaria 


resumed following suspension 
and Ferruzti’s sale of its 49 per 
cent stake in the insurance 
group to Gate. Fondiaria rose 
L290 from last Friday’s presus- 
pension price to L58200, disap- 
pointing after the L3,600bn 
transaction indicated a price of 
L86J300 a share. 

AMSTERDAM had another 
quiet day, with turnover at a 
foirly thin FI 604m and the CBS 
tendency index falling 0.7 to 
186.8 after early declines on 
Wall Street 

NMB-Postbank closed steady 
at FI 47 after the offer price iter 
the privatisation of a 30 per 
cent stake in the newly-merged 
bank was fixed at FL 4620. Ned- 
lloyd, the transport stock, 
fP»w*H FL120 to FI 8620 bflfon 
news that the company expects 
a profit increase this year of at 
least 56 per cent 

OSLO remained in a positive 
frame of mind, as industrial 
issues attracted buyers. The 
all-share iwifa gained 329 to 


49620 on turnover of NKr333m. 

Norsk Hydro advanced 
NKr22 to NKr 157.5 in busy 
trading after it said it had 
upgraded by 10 per cent the 
recoverable oil reserves at the 
Oseberg field, in which it has a 
13.75 per cent stake. Saga 
Petroleum, which has a 8.61 
per cent stake in the field, 
picked up NKr22 to NKrS&5. 

Aker, which raised Its tedd- 
ing in Spanish cement- pro- . 
ducer Valenciana last week, 
rose N Kr32 to NKrltttS. 

STOCKHOLM concentrated 
on the possible merger of PK- 
Rankgn and Nordbanken. both 
of which were suspended 
before an announcement 
today. Tbe AfHrsvariden Gen- 
eral index gained 72 to 1^644 
in moderate trading. 

Ericsson, the telecommuni- 
cation group, saw its free B 
shares gain SKx6 to SKX834, in 
the day’s largest turnover of 
SKrl&n, on rumours of a large 
order from the US. 


BRUSSELS was pulled 
higher by gains in holding 
company Society Gdndcale de 
Belgique, which added BFr90, 
or 2.7 per cent, to BFr3,470. It b 
expected to announce a 
restructuring of its non-ferrous 
mining metallurgfcal inter- 
ests today. One of its non-fer- 
rous metals mrfta that is not 
expected to be involved in the 
move, Asturienne, rose BFtsa, 
or 62 per cent, to BFrl£6Q. 

VIENNA surged again,, as 
tbe Credit Aktten index added 
8.49 points, or 2 per cent, to 
43722. Girozentrale, the Aus- 
trian bank, preeflets continued, 
long-term interest in the 
bourse. "The next strong rally 
is already pre-programmed, 
due to the thinking of many 
"""lpardim, which should mean 
that g ro w th in both business 
volume and profitability in the 
next few. years will be well 
above the International aver- 
age,” writes the bank In its 
November trends publication. 


FT-ACTU ARIES WORLD INDICES 


Jointly compiled by Tbe Financial Times Limited, Goldman, Sachs & Co., and County NatWest/Wood 
Mackenzie in conjunction with the institute of Actuaries and the Faculty of Actuaries 


NATIONAL AND 
REGIONAL MARKETS 


TUESDAY DCCCMBBt 5 1W 


DOLLAR INDEX 


Fig urea (n parentheses 
show number of stocks 
por grouping 


Australia (85) 

Austria (19). 

Belgium (63). 

Canada (122)- 

Denmark (36). 


Finland 


France ■_ 

West Germany (96).. 

Hong Kong (48) 

Ireland (17) 

Italy (97). — 

Japan (455) 

Malaysia (36) 

Mexico (13) - 

Nethcriend (43)— 

New Zealand (18) 

Norway (24) 

Singapore (26) 

South Africa (60) — 

Spain (43) 

Sweden (35) — 

Switzerland (64) ... 

United Kingdom (304) „ 
USA (544) 


US 

Dollar 

Indent 

Change 

% 

Pound 

Sterling 

Index 

Local 

Currency 

Index 

Day’s change 
% local 
currency 

Gross 

Dtv. 

Yield 

US 

Dollar 

Index 

Pound 

Sterling 

Index 

Local 

Currency 

Index 

1989 

High 

1989 

Low 

Year 

ago 

(approx) 

IEHK1 

-0.3 

139.99 

12625 

-0.4 

5.38 

148.79 

141.08 

126.72 

160.41 

12828 

146.15 

152.67 

+ 02 

144.13 

141.54 

+ 1.0 

1.72 

151.44 

143.61 

140.15 

172.22 

92.84 

98.41 

143.57 

+ai 

14028 

13721 

+0.1 

425 

T4&42 

140.74 

137.07 

748.57 

12528 

13327 

149.79 

-0.3 


128.14 

-02 


150.22 

142.45 

12827 

154.17 

124.67 

122.73 

234.68 

+ 0.0 

22124 

220.63 

+02 

1.43 

234.57 


22020 

2342S 

165.35 

159.19 

12626 

+ 1.9 

119.76 

111.63 

+ 12 

2.53 

124.54 

118.10 


159.16 

118.63 

13728 

144.98 

+0.3 

138.86 

137.93 

+ 0.0 

2.70 

144.57 

137.09 

13728 

14428 

112.57 

110.64 

108.55 

-0.6 

102.47 

10022 

-02 

2.08 

109.18 

103.63 

101.06 

109.18 

79.56 

87.57 

116.33 

-02 

109.81 

116.69 

-02 

4.88 

118.63 

110.59 

117.00 

14023 

88.41 

11123 

168.19 

+ 0.5 

158.77 

16023 

+ 0.6 

2.77 

16724 

158.68 

15927 

168.19 

12520 

132.64 

9224 


87.45 

H^avijr r- 1 

-02 

2.52 

92.66 

8729 

90.81 

96.73 

74.97 

8425 

196.88 

+ 0.5 

185.86 

178.84 

+0.6 


195.89 

185.75 

177.75 

200.11 

16422 

19022 

210.35 

+ 1.1 

198.57 

219.22 

+ 1.1 

2.42 


19722 

216.87 

21025 

143.35 

■FTTH 

290.67 

+02 

274.40 

84528 

+0.4 

0.S1 

28929 

27428 

64120 

32621 

15322 

16926 

14624 

+02 

129.17 

125.15 

+ 0.6 

426 

135.60 

128.77 

124.46 

13623 

110.63 

110.56 

752S 

-02 

7120 

68.09 

-02 

525 

7527 

7224 

6822 

88.18 

62.64 

68.70 

181.46 

+0.3 

MfiKM 

167.73 

+02 

1.63 


171.62 

18729 

19829 

13922 

129.91 

168.97 

+ 02 

159.51 

15122 

+0.7 

128 

167.59 

158.91 

1X3.40 

170.62 

12427 

11822 

173.68 

-12 

16326 


-0.6 

3.81 

176.66 

167.54 

151.16 

176.68 


72628 

159.11 

-0.1 

15020 

138.74 

+ai 

3.78 

150.32 

151.07 

138.62 

169.75 

143.14 

14824 

169.70 

+0.4 


160.15 

+0.4 

2.14 

169.01 

KfTiTT^R 

159.44 

16824 

136^45 

142.90 

9223 

+0.1 

8727 

9029 

-0.8 

2.08 

92.16 

87.41 

91.40 

94.16 

67.81 

7925 


+ 1.4 

m’rm 

140.47 

+ 1.0 

4.39 

146.68 


139-09 

168.41 

133.28 

13720 


-0.6 

133.77 

141.70 

-0.6 

328 

142.55 

135.17 

14225 

14629 

112.13 

113-03 


Europe (993) ...... 



125.11 

123.98 

+ 0.3 

3.39 

131.78 

124.94 

123.84 

132.95 

112.63 

11427 

Nordic (121),.. . 

172.97 

+ 02 

16329 

156.10 

+ 0.4 

1.82 

172.41 

183.48 

15526 

178.38 

13725 

13729 

Pacific Basin (688) 

191.93 

+ 02 

181.19 

17424 

+ 0.6 

0.69 

191.03 

181.14 

173.35 

194.72 

160.44 


Euro -Pacific (1661) 

168.26 

+02 

158.84 

15420 

+ 02 

126 

167.41 

158.75 

15047 

16826 

141.56 

157.42 

North America (666) 

142.09 

-0.6 

134.13 


-0.6 

328 

14220 

13&51 

141.53 

148.66 

712.79 

113.54 

Europe Ex. UK (689)-..... 

12123 

+0.0 

11424 

11328 

-02 

2.72 

121.42 

115.13 

114.12 

121.43 

96.30 

100.43 

Pacific Ex. Japan (213)... 

132.62 

-02 


11826 

-02 

428 

132,83 

12526 

119.11 

140.05 

111.93 

12486 

World Ex. US (1656) 

167.75 

+0.5 

15826 

153.43 

+0.4 

123 

166.98 

15824 

152.77 

167.75 

141.49 

1*590 

World Ex. UK (2096) ... 

15824 

+0.0 

14928 

150.34 


1.94 

158.23 

15a 04 

■PTl 

15824 

136.98 

139.61 

World Ex. So. Af. (2340).. 

157.28 

+0.1 

148.47 

14929 

+0.1 

2.14 

157.08 

14823 


15728 

136.67 

190.49 

World Ex. Japan (1946)... 

138-58 

-0.1 

130.82 

134.21 

-0.3 

3.39 

138.79 


13425 

140.43 

114.51 

114.68 

The world index (2400)... 

157.38 

+ 0.1 

148.57 

14929 

+0.1 

2.15 

157.17 

149.04 

14923 

16728 

13628 

139.43 


Copyright The Financial Times Limited, Goldman, Sacha & Co., and County NatWest Securities Limited. 
Latest prices were unavailable for this edition. 


1967 • 


Announcing the new 


J.P. Morgan 

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FINANCIAL TIMES THURSDAY DECEMBER 7 IWS9 


SECTION III 


FINANCIAL TIMES 


As the industry has 
• j^r V8r seen a process of 
•fpErfc \ ratTonalfsatibri, 

Japanese suppliers 
^"w"^ have been making 
Inroads into the European market 
— a, pressure that will intensify, 
predicts Nick Garnett. At the same 
time, a range of important technical 
developments is emerging. 



THE WORLD’S diesel engine 
industry has been facing up to 
some of the Wggest-ever shifts 
in its market and structure 
during the past two years. 

Demand fur ^Hcaria in pas- 
senger cars has plummeted, 
particularly in West Germany 
‘ and Italy. The French market 
is the only one that has hed 
Jap strongly, as a result of 
which the French diesel indus- 
try overtook that of Germany 
last year as Europe’s biggest 


At the same time, diesel 
manufacturers have witnessed 
a process Of g putfa rationalisa- 
tion, which has- altered the 
industry’s ownership base. 
This has happened partly on 
the hack of mergers and take- 
overs among truck . atuf car 
makers. But it has also 
occurred as a result of the bat- 
tle between- Germany’s - MAN 
«md WfirtaQa, of Finland, both 
of which have been baying out 
ar taking stakes in other die- 
sel-makers, especially in 

m a rine en ginea 

White an this has been string 
on, Japanese suppliers nave 
been making substantial 
fnmadR into the European die- 
sel market In the past four 
years, the Japanese sales share 
of diesels under 5Qhp has risen 
from 7 pec cent to 35. per cent, 
according to ' replanning 


Research and Systems (FRS)*, 
a London-based consultancy 
that specialises in the automo- 
tive and engine industries. 

This competitive pressure 
could get worse, because Tan- 
mar, Japan's biggest dlesel- 
maifpy ap pea rs ready to launch 
an assault on the European 
market far small diesels with a 
new air-cooled in com- 

petition with indigenous pro- 
ducers like Germany's Deutz 
and Uster Fetter, of the OK. 

A range at technical develop- 
ments is also emerging in the 
market. It includes electronic 
nniwpmg^ to im pr ove emis- 
sion control; direct-injection, 
which first appeared on an 
engine for the Fiat Croma; 
m h wwMiHwg ; nnrf “turbo com- 
pounding" for truck flw gmwe — 
the use of a second turbo- 
charger in the drive train. 

Until the start of this year, 
the world market for diesels 
had continued to perk up since 
the depths of recession hack in 
the mid-1980s. Total sales of 
diesels last year was 11.6m 
lmHn, compared with it-im in 
1987. This compares with a 
slide of 300,000 between 1981 
and lS83(9.4n2) and a static 
market of around nntfl 
1987. 

.Last year, in trams of appB- 
cation, growth was achieved in 
commercial vehicles, construe- 


WORLD PRODUCTION OF DIESELS 

millions of units 






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THE WORLD 


dan machinery «tmI industrial 
equipment, while the agricul- 
tural machinery market was 
static. 

The only sector to record a 
fail was the diesel car market, 
which was down by 100,000 
This reflected a process 
over the past two years, during 
which the p en et rat ion of the 
d iesel in the Italian and West 
German car markets was 
pushed into reverse. 

Environmental issues arid 
general perceptions ~ about 


emissions from diesels resulted 
in a reduction in diesel pene- 
tration of the German car mar- 
ket, from a peak of 27 per cent 
in 1986 to about 10 per cent 
This affected most car-makers, 
but Mercedes in particular. 

Changes in road taxes con- 
tributed to a slide in the Italian 
market, too. Diesels had 
achieved a 24J5 per cent share 
of the car sector, but it is now 
down to 16 per cent 

The total market for car die- 
sels will- probably have fallen 


again this year, with penetra- 
tion in western Europe expec- 
ted to be down a percentage 
point to 14 per cent But some 
observers believe this slide 
may be coming to a halt, par- 
ticularly in West Germany, 
and might even be re v e r sed. 

All the Tnflin German car- 
makers. have brought out new 
engines with electronic con- 
trols, and Volkswagen has 
installed, a catalytic converter 
an one of its new diesels. 

Environmental issues have 


NDUSTRY 


left the French market totally 
unconcerned, and penetration 
there .has continued to grow. 
The diesel took Just over 18 per 
at the French car market 
in 1987. This has bolstered the 
strong growth of Peugeot and 
Renault as diesel producers. 
PSA’s diesel production last 
year was about 750,000 units. 
Total diesel production in 
France is two and a half times 

higher thap in 1 932. 

.Diesel penetration -in the 
Japanese car . market < is at 


about 5 per cent Jt remains 
Insignificant in the UK, while 
the car diesel has been virtu- 
ally wiped off the map in the 
US. In 1981, 52L0Q0 diesel cars 
were sold in the US. Last year, 
the figure was 1.650, almost all 
of them were German-built 
Mercedes. 

Makers of truck diesels have 
also been busy on the technical 
front, with some of the work 
directed at wnfawinna. Navistar 
last month announced what it 
was the first smoke- 
less truck diesel. The Interna- 
tional 94 uses a catalytic con- 
verter and low-sulphur(0.5%) 
diesel ftiel. and incorporates 
engine components which 
result in more complete com- 
bustion. 

After a strong recovery from 
the dismal trough of the early 

1960s, the European truck mar- 
ket appears to have peaked in 
the second half of this year, 
though sate prices remain rea- 
sonably healthy. The north 
American truck market has 
already moved into a cyclical 
downturn, and pricing is hor- 
rendously tough. This will put 
extra pressure on all diesel 
suppliers, in particular Cum- 
mins, the large independent US 
diesel-maker. Its policy of low 
pricing, aimed at maintaining 
its share of the market against 
Japanese suppliers, worked in 
terms of market-penetration, 
but the penalty on profits has 
been drastic. 

Japanese producers are still 
exercising a lot of pressure on 
the market Some or this comes 
from direct exports. In some 
cases, western makers will- 
ingly take Japanese engines to 
bolster their product lines. Per- 
kins signed a deal last year to 
sell ISM engines with the Per- 
kins br and-name . 

The next stage could come 
from Yanznar in small diesels. 
Some European makers of 
small diesels, like Lombardini 
in Italy, have abandoned air- 
cooled technology and moved 
into water-cooled. Yanmar, 
family-owned and one of the 
biggest diesel-makers in the 
world (it produces 350,000 units 
a year), has gone the other way 
«nd is highly confident about 
increasing its European pene- 
tration for such applications as 
compressors, mini-tractors and 
small construction machin ery, 

with its new air-cooled unit. 

It is not an one way though. 
Japanese manufacturing com- 
panies provide new opportuni- 
ties for same European diesel 
makers. Volkswagen is to sup- 
ply diesels for the Nissan car 
plant in the UK and for Toyota 
vans. 

The ownership structure of 
the industry has been going 
through some significant 
ghiftg- Some of thfc has been 
on the back of take-overs 
among truck-makers who man- 
ufacture diesels. The most 


CONTENTS 


Technical dwto pw ntos 

M fHw; C rawta a ng —to 2 

Truck* Cam > 

Tractor* * oww*rt»edon 

TIM Industry In Brazil 4 

Manufact urer prodtos « 

FdWowal prodxbon: Monki Qavtoi 


recent ones include the pur- 
chase of the truck operations 
of Steyr-Daimler-Puch, in Aus- 
tria. by MAN and the battle for 
control of Enasa which, along 
with trucks, also mak es about 
23,000 diesels a year in Spain. 
In the long run, these deals ore 
bound to lead to engine ration- 
alisation. Leyland stopped 
making track diesels in the UK 
following Its take-over by DAF. 
There is speculation about the 
long-term engine strategy of 
Ford, following the merger of 
its European truck operations 
with Iveco. 

The recent decision by the 
cartel office to block MAN'S 
purchase of the engine busi- 
ness of Sulzcr of Switzerland - 
a decision which MAN is chal- 
lenging at federal government 
level - is a further twist in the 
restructuring of heavy, espe- 
cially marine diesels in 
Europe. 

Over the past few years, the 
most active participants have 
been MAN and Wartslla of Fin- 
land. The latter company, hav- 
ing watched its German com- 
petitor grow through 
acquisition has adopted a simi- 
lar policy. 

Acquisitions in the past 10 
years or so by MAN have 
included Blrmeister and Wain, 
in Denmark, and, much more 
recently, Plelstlck of France 
with its medium-speed engines. 
There is also a link In diesels 
between MAN and Alsthora of 
France, which has itself been 
put into a merged grouping 
with the heavy-engineering 
business of the UK’s GEC. A 
deal with Suker would consoli- 
date MAN’S strong position. 

Meanwhile, WSrtsild pur- 
chased an important presence 
in high-speed diesel engines by 
obtaining this year a 42 per 
cent stake in SACM Diesel of 
France. In October, it acquired 
60 per cent of Stork-Wcrkspoor 
Diesel, the Dutch medium- 
speed diesel maker, having 
already bought two companies 
in Scandinavia. 

Other changes indude a type 
of management buy-out at VM. 
in Italy and, last year, the 
merger at the distribution net- 
works in north America of Per- 
kins and Detroit Diesel. 

* World Engine Study, £600. 
World Engine Digest £245. PBS. 
44-48 Dover St, London WlX 
3RF. 


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1 

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II 


c DIESEL ENGINES INDUSTRY 2 ~) 


financial 


TIMES THURSDAY DECEMBER 7 


TECHNICAL DEVELOPMENTS: the big challenges are consumption and emissions 


A future friend of environment 


THE DIESEL engine is the 
natural choice of power unit in 
a wide range of applications, 
without serious competition 
from alternative prime movers. 
Yet it Is subject to considerable 
economic and legislative pres- 
sures to develop and Improve 
its performance. 

In the case of large 
running continuously for 
periods, the cost of fuel 
nates most other factors; and 
designers strive to reduce fuel 
consumption and increase tol- 
erance to cheaper fuels of 
poorer quality. 

Such is the achievement of 
the very large slow-speed 
marine engines that they can 
operate on fuel that It would be 
difficult to bum In a grate. 


World diesel production fai 1988 

■ — — — Jndustnal 0J9m ,‘S-. .'** 


- - -- ' Industrial Qjjrn 

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V.i- i.wMMnaat-.awr aawa^w 4 


-Latin- AmertcaO SSSfT*** 53 






Diesel engine production 


In addition to the drive to 
reduce fhel consumption, the 
diesel Is under pressure to 
reduce the level of exhaust 
emissions released to the atmo- 
sphere. This requirement has 
become critical in -the passen- 
ger-car market, and is rapidly 
approaching in the truck sec- 
tor. In non-sutomotive applica- 
tions, it is also important, par- 
ticularly for agricultural and 
construction equipment 

The critical area in which 
technical developments can 
improve fuel consumption and 
reduce emissions la the control 
and management of combos 
tion. As a result, much alten 
tion is being paid to the devel- 
opment of improved 
fuel-injection systems and of 
electronic management of the 
overall combustion process. 

In the passenger-car sector, 
electronic control of ignition 
timing and other parameters 
has been in use for several 
years on gacoifriw engines. One 
of the attractions of the diesel 
engine is that, traditionally, it 
has been mechanically con- 
trolled and has achieved 
greater reliability from its 
Independence of electrical 
systems. 

However, with the continu- 
ously improving efficiency of 
gasoline engines and the rapid 
change in attitudes to exhaust 
emissions, the passenger-car 
diesel is being forced to con- 
sider electronic control, both to 
maintain its advantage in fuel 
consumption and to meet per- 
ceived and legislated levels of 
exhaust emission. 

Electronic engine manage 
ment control systems are 
already offered an some diesel 


By applcafion in 1987 (mffian) 
2.0 



cars, and a recent study by 
automotive consultants FRS, 
in western Europe, found that 
most car manufacturers expect 
to incorporate them an their 
diesel models by 1992. The 
exceptions were producers of 
small diesel engines, which can 
more easily meet the existing 
awl proposed legislation. 

The objective of electronic 
systems in a diesel engine is to 

Control the timing and q nan 
tity of the fuel injected into the 
combustion chamber. In addi- 
tion, turbocharger pressure 
and exhaust gas recirculation 
can be controlled. Electronic 
control can offer up to 5 per 
cent savings in fhel consump- 
tion, and enables significant 
reductions in exhaust emis 
stons to be achieved. 

With electronic control, die- 
sel passenger cars are likely to 
be able to meet future exhaust 
emissions legislation. In 
response to the adverse public 


attitude to diesel cars, particu- 
the past 


lady in Germany, in 
year, the maj or pr oducers, Mer- 
cedes-Benz, vw and BMW, 
have all made considerable 


progress in reducing emissions 
levels. VW has Introduced a 
diesel version of the Gdf with 
an oxidation eataiy et, resulting 
In very low hyd r oc ar bon and 
carbon-monoxide levels, more 
as a gesture to public concern 
than as a requirement to meet 
exhaust legislation 

The biggest unsolved prob 
lem for diesel passenger cars is 
the development of a regenera 
tive particulate trap to remove 
soot particles from the 
exhaust This has been a real 
concern, particularly for the 
Californian market where the 
legislation is very strict indeed. 
However, developments in 
combustion-chamber design 
and the application of elec- 
tronic engine management 
systems have ensured that, at 
least in we stern Europe, where 
the major demand for car die- 
sels exists, the particulate trap 
will not he necessary. 

For a long time just round 
the corner, but at last ™ming- 
into sight, is the direct4njec- 
tlon passenger-car diesel. 
Direct injection offers up to 20 
per cent better fuel economy 


and is a major factor in the 
diesel engine’s competitive 
future. Its main disadvantages 
have been emissions levels and 
noise, and these have so far 
limited its use mainly to vans, 
although Rover and Flat both 
offer direct-injection engines in 
some models. 

Exhaust emissions can be 
reduced only by tighter control 
of the fuel and combustion 
systems, and this will be 
achieved through electronic 
co nt rol and high-pressure fuel 
injection. 

The noise problem is being 
addressed though the use of a 
two-stage injector. This allows 
a small volume of fuel to be 
injected ahead of the main 
injection, and has the effect of 
reducing the rate of pressure 
rise (and noise) In the 
cylinder. 


Whereas car diesels look 
capable of meeting future legis- 
lation without fundamental 
change, the same cann ot be 
said for heavy trucks. Here, the 
combined demand for reduced 
consumption and lower emis- 
sions will dominate develop- 
ments over the next decade. 
Electronic control of fuel injec- 
tion will be universally used to 
optimise combustion, control 
injection duration more 
tightly, and reduce emissions. 

Both injection pressure and 
rate will be significantly 
increased, with fad. pressures 
up to 1500 bar being achieved 
in pump/line systems and pos- 
sibly up to 2200 bar with «mj t 
injectors. Variable valve-tim- 
ing, already used on some 
advanced passenger-car 
engines, will be used to optim- 
ise aspiration at varying 
engine speeds, im p rov in g fuel 
consumption and oald starting. 






ELECTRONIC UNIT INJECTORS 


J W 


m / 


J 




Mir 

At 


** * , \ 


ip 

■jib 







XV 

HV-fl 


THE FUTURE NUW 


INNOVATIVE 

New from Lucas Diesel Systems, Electronic 
Unit Injectors that provide accuracy and control 
tar beyond the capability of mechanical systems. 


IN DEMAND 

Electronic Unit Injectors that respond to the 
demands of today’s high performance, high 
economy diesels - from 2.5 litres all the way up 
to 16 litres. 



IN PRODUCTION 

Electronic Unit Injectors that are in production 
now; that save materials, weight, development 
and manufacturing costs, and help to create a 
cleaner environment 


IN USE 

Electronic Unit Injectors that are in use today, on 
one of the world’s newest and most advanced 
diesel engines. 


Lucas 




iuca$ Diesel Systems Laden Road Acton londonW37RPUK Tel 01 7433111 Telex 27881 Fax 01 7409383 


£ • 


i 


Turbocharging and aftercool- 
ing will be developed, to 
achieve greater efficiencies. 


Variable geometry -turbo 
charges will be 


used to optnn 
ise efficiency across the speed 
range, and ensure adequate 
boost at low speeds to control 
emissions. Ceramic turbo- 
charger components will be 
used to increase temperature 
limits Mtirt reduce inertia. 


There is considerable inter 
est in turbo-compounding; and 
it is accepted that this technol- 
ogy will And applications In 
heavy-duty trucks. Scania is a 
leader in this development. 
Exhaust port and manifold 
insulation, through the use of 
ceramic liners, wm reduce heat 
loss and increase the benefits 
of turbocharging and com- 
pounding. 

Insulating coatings, and 
even monolithic layers, may be 
used on piston-crowns and cyl- 
inder-heads to reduce heat loss 
to the coolant Other ceramics 
applications are likely to 
include piston-rings and valve 
train components, to reduce 
friction and wear. 

Although the true adiabatic 
engine is no longer an objec- 
tive, efforts are being made to 
raise temperatures within the 
combustion chamber, and a 
critical requirement here is ^ 
development of high-tempera 
tore resistant synthetic lubri- 



NoiM and exhaust are problems lacing the car sector 


cants. 

Particulate traps will be 
essential to meet 1994 legisla- 
tive limits and, in contrast to 
passenger-car applications, 
considerable pr ogress been 
maja in the truck bus sec- 
tor. 

Three types of operation 
have been considered. In the 
first, the trap acts only as a 
filter, and is not regenerative. 
In the second, the trap Is 
regenerated by burning off the 
soot particles at specific inter- 


vals when the engine is not 
Operating. The third approach 
is fully automated, and the 
soot is burned off when the 
back pressure reaches a prede- 
termined level. This takes 
place while the engine Js run- 
ning, and does not Interfere 
with normal operation. 

Although it will be difficult 
and expensive to reduce diesel 

em ginp wmtasirms to very lOW 

levels in the future, the 
concern about car- 
will be seen to be a 


powerful arguement In favour 
of diesels. Carbon dioxide emis- 
sions cannot be processed oir 
converted, and their volume is 
In direct proportion to the 
quantity of fuel burned. 

Since the diesel engine rues 
significantly less fuel th a n any 
of Its competitors, it fa likely to 
achieve a new reputation as an 
pn T d r ^ nmpn t ‘-fri A T H ^^y choice. 


Michael Smith 


m 


PRS ConsabfOKgiftovp 


MARINE ENGINES 


A more optimistic 



THE SHIPPING Industry has 
been waiting impatiently since 
March for the resolution of a 
battle over the proposed sale of 
the loss-making marine riiagai 
activities of Sulzer of Switzer- 
land to MAN of West Germany. 

The deal was stalled in 
August by the West German 
cartel office, which refused to 
allow It to go ahead, because of 
the potential impart on West 
Germany's domestic shipping 
industry, in which the two 
companies have a virtual duop- 
oly of supply. 

MAN has refused to accept 
the decision, and has appealed 
to the West German Economics 
Ministry, which ha« the power 
to overrule the cartel office. 
The ministry is not expected to 
do so, because its responsibili- 
ties extend only to, the health- 
of West -German markets: But 
the baffle has impifiatirffisllorf, 
the entire world shipping and 
shipbuilding industries. 

Paradoxically, neither MAN 
nor Sulzer are world scale 
manufacturers of large marine 
diesel engines. According to 
Mike Haigh, of the London con- 
sultants PRS, MAN last year 
produced less than 150 engines 
of mare than 5001m at its Ger- 
man and Danish plants, while 
Sulzer produced just four such 
engines at Its plant in France. 

This compares with total 
production of L960 engines of 
500hp or more throughout 
western Europe, 3446 in Japan, 
and 184 in South Korea. 

However, the importance of 
the two companies is much 
greater in terns of design, par- 
ticularly of large engines for 
ocean-going ships a sector in 
which they jointly dominate 
the world market. This is 
because most large engines 
produced in the main ship- 
building areas in western 
Europe, Japan and South 
Korea are built under licence 
from either MAN or Suiza-. 

MAN, for example, includes 
among Us licensees: Aisthom 
Atlantique, in France; Harland 
and Wolff, in the UK; and Hel- 
singer Vaerft, in Denmark; 
Hitachi Zosen, Kawasaki 
Heavy Industries and Mitsui 
En gineering and Shipbuilding, * 


in Japan; and Hyundai, in 
South Korea. 

Sulzer’s licensees include the 
major shipbuilders: Flncan- 
tierl, in Italy, and AstUleros 
Espanoles, in Spain; Ishikawa- 
jima-Harima Heavy Industries, 
Mitsubishi Heavy Industries, 
Nippon Enkan KK, and Sumi- 
tomo Heavy Industries, in 
Japan; Korea Heavy Industries, 
in South Korea; Taiwan 
Machinery Manufacturing, in 
Taiwan; and Shanghai Ship- 
yard, in 

No accurate figures exist for 
market share in terms of 
design, but industry estimates 
suggest that at least 60 per 
cent of large marine diesel 


only 521 ships of IGLSm dead- 
weight tonnes were completed, 
compared with 1,113 stops of 
28m dwt as recently as 1982. 

The outlook for the ship- 
yards fa beginning to change, 
however, partly because 
improvements in world trade 
have increased tim profitability 
of Minting ships, and portly 
because the increasing age of 
the world fleet magma that a 
large number of ships will 
have to be built in the 1990s 
simply to replace tonnage 
which has to be retired. 

As a result to this more opti- 
mistic outlook, these has been 
a move in Japan towards co-op- 
erative development of a new 


The MAN/Sulzer domination of the market . 
for large marine diesels dates from the 
pre-eminence of European shipbuilding until 
the 1960s, before the emergence of first Japwi 
and then South Korea as shipbuilding 
superpowers 


engines are built to designs 
produced by either Sulzer or 
MAN. Mitsubishi fa thought to 
be the second most important 
designer, with around 9 per 
cent of the market 

The MAN/Sulzer domination 
of the market for large marine 
diesels dates from the preemi- 
nence of European shipbuild- 
ing until the 1960s, before the 
emergence of first Japan and 
then South Korea as shipbuild- 
ing superpowers. It contrasts 
oddly with the distribution of 
world shipbuilding orders. Last 
year, 37.6 per cent of new 
orders were won by Japanese 
yards, 24 per cent by South 
Korean yards, and 16 per cent 
by West European yards. 

Until recently, Japanese 
yards have not thought It 
worthwhile to commit the sub- 
stantial research and develop- 
ment funds necessary to 
develop an Indigenous competi- 
tor to the European-designed 
engines, especially in the fall- 
ing market which engulfed 
stopping and shipbuilding after 

the 1973 oil Bhnrk and turn per- 
sisted for 16 years. Last year, 


generation of large marine die- 
sels which could provide a sig- 
nificant competitor to Euro- 
pean domination in the next 
decade. A new company, called 
KK ADD, hra been fanned by 
mi twirl, Kawasaki, Hitachi and 
the Japan Development Bank 
to take over a research pro- 
gramme begun by a group' of 
shipyards in 1983 under the 
banner of the Hi gh Reliability 
Marine Propulsion Plant Asso- 
ciation. 

One of the principal reasons 
put forward by MAN and 
Sulzer for the merger of their 
marine diesel activities is the 
increased strength the merged 
company would have in the 
fight fin: market-share, which 
is ilkely to take place in the 
1990s if the Japanese consor- 
tium is successful in develop- 
ing a viable competitor to the 
existing European designs. A 
decision from the West Ger- 
man Economics Ministry is 
expected shortly. 

Meanwhile, Wartsfla of Fin- 
land, the other major European 
producer, has faced problems 
In m aintaining market-share 


because of the difficulties of 
the Ftonishshipbufidlng indus- 
try, which, has found it hard to 
compete with the low-cost 
Asian producers and the subsi- 
dised yards of the European 
Community. 

WrirtsUahas majority Ahare- 
hoWings in a number of .non- 
Finnish engine-builders - 
including Wichmann of Nor- 
way, Echevarria of Spain and 
Nohab of Sweden and haa 
recently taken a 6tt per cent 

atakft in Stork-WerKsporr Die- 
fieL of The Netherlands, and a 
42 per cent holding in Duvant 
CrepeUe, of France. As a result 
tf these interests, production 
off marine diesel engines of 
more than 500hp last year 
amounted to more than 130 
. Un i t s. . .-.'-jx. j. • 

. All three -. Euro pean produc 
lers are also -casting their eyes 
towards the shipbuilding 
nations of .' .eastern Europe, 
including the Soviet Union, 
where economic . and political 
liberalisation could - have 
unpredictable consequences. 
“The low-cost shipyards in 
Poland, East Germany and 
elsewhere could emerge as seri- 
ous competitors in world ship- 
bufidiog-if they can guarantee 
quality," Bays Mike Haigh. 
"But they could, just as easily 
collapse and. disappear under 
the strains of operating in a 
market economy.” 

• The future of shipbuilding in 
eastern Europe is still too 
uncertain for accurate proph- 
esy, but a merged MAN-Sulzer 
company would be in a power- 
ful position if shipbuilding 
demand were to increase dra- 
matically. 

MAN has licenoees at the 
Lenin Shipyard, in Poland; 
Brodogradevna Industry a,in 
Split,. Yugoslavia; and the 
Bryansk Engineering works, in 
the Soviet Union; while Sutter 
has ftTmiinr arrangements with 
the Koraboimpex Varna Works, 
in tiie Soviet Union; VEBDto- 
selmotorenwerk, at. Rostock, 
East Germany; Zaklady Prte- 
myslu Metalowego, in Poznan, 
Poland;, and Jugoturtona, In. 
Kariovac,' Yugoslavia. 


Kevin Brawn 


GENERATING SETS 


Ail change in the market 


MANUFACTURERS of 
generating sets have had to 
adjust to a rapidly changing 
world market during the last 
five years. 

In some regions demand has 
risen, in others it has fallen. 
Africa is the only continent 
where demand has returned to 
something like the levels of 
1985, with sets now, as then, 
required largely to provide con- 
tinuous power- 

The UK industry, with 
annual exports worth just over 
£100m, has been looking, in 
particular, to the Far East to 
compensate for the tail off in 
demand from the Middle East. 

Newly-industrialised coun- 
tries, such as Malaysia, Indon- 
esia and Thailand, which once 
required generating sets to pro- 
vide a continuous power 
source, now need sets more for 
stand-by, rather than for con- 
tinuous power, as back-up for 
their growing commercial and 

industrial sectors, fed princi 

pally from a national grid. 

It fa in this region that Euro- 
pean manufacturers, some of 
them now with local offices or 

agents, face perhaps greatest 

competition from Japanese 
reducers prepared subs tan 


tially to undercut competitors 
just to get a market foothold. 

The Japanese have a pres- 
ence in Europe, but mainly at 
the smaller, petrol-driven end. 
-There also continues to be a 
small but significant number 
of UK producers working on 
the industry’s fringes, many of 
them assembling sets in a shed 
or garage, undercutting the 
reputable manufacturers but 


solution, especially in standby 
applications. 

The Association of British 
Generating Set Manufacturers 
(ABGSM) recently joined forces 
with its counterparts in France 
and Italy to form Europegen, to 
help set common standards as 
the industry moves towards 
1992. 

The ABGSM, whose six full 
members have a combined 


The UK industry has been looking to the Par 
East, to compensate for the fall In demand 
from the Middle East, says ALASTA1R GUILD 


very often failing to meet 

warinfl fll or international stan- 
dards. 

The well-established Euro- 
pean manufacturers are confi- 
dent abort the future, provided 
standards are maintained and 
adhered to. The present 
national standard is BS5750 
Part 1, generally thought to be 
among the highest in Europe, 
and well hi line with ISO9000. 

There has been a concurrent 

trend towards . greater techni- 

cal sophistication, with 
demands for a more and more 
compact and cost-effective 


turnover of £100m, and pro- 
duce mostly diesel-driven and 
gas turbine sets jn the range 
lOkVA to 5MW, fa hoping to 
involve the Germans Span 
ish by the end of the year. 

The association has also 
commissioned a study, jointly 
with the Department of Trade 
and Industry, of future market 
potential in Europe, where 80 

per cert of sets are required for 


stand-by applications. The 
report, not for 


publication, 

looks particularly at public-sec 
tor possibilities such ashospl 
tals. telecommunications. 


energy, forestry and leisure. 

Some British companies that 
make diesel for gener- 

ating sets have sold to French 
generating-set manufacturers 
in the past. During winter 
months, when .the electricity 
supply industry in France fa 
unable to meet- pee* 
utilities can requJrethe private 
sector to supply power beck to 
tbe grid., Tbaihas represented 
a substantial market for' manu- 
facturers such as R e na ult 
Industries and SDMO, though 
it. is one that is thought largely* 
to have been satirised. 

The changing pattern of elec- 
tricity supply in the UK could 
mcrease demand for generat- 
ing sets, particularly at the top 
end of the range; to provide 
prime power for localised, or 
remote . app lications.' 

The industry has also been 
looking closely at tte potential 
for generating-sets in combined 
08®* and power (CHF) apnlica- 
tions, thought mostly to win . 
leisure or large gimppmg cea- 
toes,.and hotels. A CHP system 7 
can double the emdency of =a 
Penpal generating : set in- con* 
ywfrog'tha energy in diesel ofl. . 
into usable energy,: and the 
nitons then become the top-up 


3 

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FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


DIESEL ENGINES INDUSTRY 3 


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** 






John Griffiths considers the accomplishments and challenges in the commercial vehicle and passenger-car sectors 




recovery is slowing down 


iWER 5BVBBAL years of 


WWJWO.BWI <mU-UGcUmjr JJXW 

^ g ood times appear to be 

drawingto ttad Ear the mak- 
heavy trucks a nd the 
weel engine producer? who 
supply them.. 

' to western Europe, most 
truck-makers are still ridtog a 
wave of record. market 8 and - 
ft MA4 U kea “ trot Are weQ aware, 
tost. Its momentum is fading 
fiMLlfce. .ima^jmribn 3s. not 


■ - Is the US, the world's single 
largest heavy track market, 
the downturn is already well 
unto way - sales fell by over 
SO per cent in the third Quarter 
of this year, and some manu- 
facturers are already institut- 
ing production cuts and lay- 


fr tftn the region’s 


how much. 


record halt 

year, bothy 


Only in Japan, almost a 
closed market for . western 
. truck and diesel makers (Volvo 
and Mercedes alone are mak- 
ing-eves token sales) and some 
developing countries are buoy- 
ant cntirfiHrmgtfr he faUZttL 
_ Inconveniently, the down- 


Economy the 
driving force 


VIRTUALLY the..- -only 
attraction- of the attsfl in light 

vehicles is its economy. And 
.this can be seen m the sharp 
contrast between, western 
Europe’s car and light commer- 
cial vehicles markets. 

... Lasf.year, 15 per cent of the 
13m "h ew c a rt sold in the 
region were powered by die- 
sels. Yet in the Kght commer- 
tial vehicle sector, where oper- 
ating cast rather than dynamic 
performance is' the overwhelm- 
ing priority, nearly six out of 
10 vans, pick-ups and shnOar 
veh&to “staff' ‘ware dr&er-pqw^ 
exed , with market penetration 
hovering around 70 per cent in 
Italy. France and Spain. 

The link between economic 
factors and the dtearf -has led 
to extreme sales volatility 
throughout the 1980s, sales 
having received a notable 
boost from the post-1979 oil 
price escalation. Also indica- 
tive of the economic factors 
that drive , the diesel market is 

- flip faefr that walgff flf ritawnl cats 

The link between 
j economic factor* end 
the . diesel has led .to 
- ' extreme' sales . - . 
-volatility throughout - 
.. theigSOs .?' 


are virtually non-existent in 
north America, where petrol 
prices -remain .far below world 
levels:.. 

..-.-.More' recently, however, 
environmental issues hare 
casze to the.fcae, with widely 
on-dmtividMd 

rf.-Ju- West Germany, where 
there has been, intense concern 
about -all aspects- of pollution, 
uncertainty over the framing 
andseverity of iutendedBuro- 
-pean Community legislatlan <ni 
petrol ear exhaust emissions 
3ed to-a temporary surge, in <fie- 
selcar aales^They leaped from 
Justover lOper cent of safes in 
J983 to peak at more than 27 
perxedt in4987.- onlyto bare 
plunged in rim past . two years, 
as a result of the petafl-engiae 
emission uncertainties being 
jxssaHftL fnfevbar »af dateflytic 
converters, and the relative 
"cleanliness* of the diesel 
being brought increasingly 
into question. '-«• - - 
Market, trends have^ differed 
sharply, in other- individual 
countries. For eanunphy diesel 
sales are continuing to. rise 
Hfa*aifiiy , although from a small 
•base inthe UK, where not until 
fliis year have exhaust emds- 
SIotis become a matter of wlde- 
ly -debated pubhc concern. 

fronically. the diesel is cur- 
rently going through a sevmre- 
bout ;«E adverse -publicity, 
despite its ability already to 
meet the amissions standards 
being Introdoced oto the next 
three years for petto! care — at 
least, in .terms of- the; severe 
pollutants like oxides of nitro- 
gen,' which Kive rise to “add 
rain", and the hydrocarbons 
which bdp create p h o tochemi- 
c al smog. Despite rim diesel’s 
tenden cy to be smokier and 
n ptater than a petrel- engine, it 
a tan produces only about one- 
tenth the -yolnme of carbon 
dioxide^ the - now-notorious 
cause of the "greenhouse" 
effect . - 

Yet n stOHoheproved assa; 
Hen by some environmentalist 
grtwps that particulate einis- 
.stons from diasds' are xardno- 
genic, and tougha' standard*, 
soon to“ be applied to reduce 
such emissions, make- it likely 
■ that car diesel sales, in Western 
Europe wSTgo into - a -slight 
decline over 1 the next eouple of 
yearsJ --- : 

Z' hi spite of this, major manor 
fteturers - end' some ' market 
analysts remain optimistic 
About the mid-' to -long-term 
prospects for ear diesel sales’ 
recovering toat least tbfl l evels 
■achie ved in theimd-19806, even 
in the ■ absence of "abnormal" 
fectore-such as a t^eat of the. 
oS crises which boosted diesel 

sales- so dimndy-hz- the past. ■■ 

: A ’Study -by Knibh Gonne- 

zano and Partners - ctmcludes, 
to- example,'’ that “In spite of 
the general trend cansed by 
the partfaxdates issue, bur toe- 
refiect an optimistic view 
af diesel peroration in the car 
sector as a whole.. ;based-on 
the beBeEthat, in time.'thedJe- 
ad \wffl- aivlummsntal 

ecoeptance -in -most- markets, 
and that the general -tightening 
up of European embanens will 
eventually week to the advan- 


tage of dieseL* 

The study predicts that, by 
the late 1990s in western 
Europe's 10 principal markets, 
ri fow car sales will at least 
regain the IS per cent level 
reached during the mM-lSRJs 
after di p pin g to around 12 per 
cent over the next two to three 
years. 

;. It expects the light-commer- 
cials pyfor In threw markets to 
remain virtually rmaffentod by 
the particulates debate, and 
iWiwh van pick-up «*iret by 
then to account for around 65 
per 'cent of the total, compared 
w<th around 57 per re*nfai»rin g 
tire current year. 

- Forecasts like tw« presume 
that such diesels will be able to 
meet the tighter EC exhaust 
emission standards. These 
have yet to be approved in 
t>iAir final fern, but are expeo- 
ted to stop short of requiring 
the fitting of particulate 
“traps", a complex and costly 
system for ca pturin g the par- 
ticulates Mwri burning *Vm™ en 
masse at regular intervals - 
requiring temperatures higher 
than those ordinarily reached 
within the vehicle's exhaust 
system. 

Another important ec o n «***i« 
factor impinging mi the diesel’s 
future is the single EC market 
plumed for post-1392. Cur- 
rently, diesel fuel prices vary 
enormously from country to 
ra in n try — from less than half 
the price of petrol in Italy, to 
only slightly cheaper in the 
UK. 

The EC’s intention to har- 
monise fuel prices, through 
areg lm e of similar value added 
and excise -taxes, may also s|g- 
nfficaatly- affect- the. pattern of - 
demand. Keeping road trans- 
port costs as low as possible 
within the sing le market is 
expected to be a priority - 
hence, diesel fuel prices can be 
expected to harmonise at a rel- 
atively low level. 

This amid mean an upsurge 
•in diesel ^ sales in countries Eke 
the UK - where diesel cars 
currently account , for only 5 
per cent of the total - but a 
decline in countries Eke Italy. 

. The downside, however, is 
that no gove rnme n t Is likely to 
tolerate the reduced fuel tax 
take that would arise from a 
population explosion of diese l 
cars, which are at least 25 per 
cent more economical than 
their petrol-powered counter- 
parts. 

The likelihood, therefore, 
Khfbb, Gonnezano suggests, is 
that they would seek to com- 
pensate with increases in other 
areas, such as wwmmi licensing 
foes* The overall picture; how- 
ever, may yet be improved by 
further technological develop- 
ment of the dieseL 
. . Electronic engine manage- 
ment, variable-flow turbo- 
charging and more sophisti- 
cated fuel injection and 
combustion chambersystems 
jrfi |ini/i out the promise of sub- 
stantial Improvements in paQu- 

. No government Is 
likely to tolerate the. 
reduced tael.tax that 
could arise from a 
population explosion 
of diesel cars 


t£on control, fuel economy ahd 
on-road performance - the last 
currently accepted as being the 
single biggest disincentive fix 
the majority od drivers. 

Performance facrwwft o£ iq 
per cent on current diesel mod- 
els and fuel consumption 
. improvements of at least 5 per 
cent .are Bxpected to be 
achieved with relative ease, 

altho ugh they may add up to 
20 per cent' on current unit 
costs. The performance deficit 
is in some cases already being 
sharply reduced. 

At the end of September, for 
example, CItrofin, part of the ' 
Peugeot Group which is the 
world's single largest diesel 
engine maker, unveiled a paw 
diesel for its XM executive car 
which, in turbocharged farm, 
propels the XM to a top speed 
of I20mph and provides accel- 
eration from standstill to' 
6omph in around 12 seconds. 

Citroen claims a diesel 
engine “world first” for the 
gjlitre unit. In its having three 
■valves -per cylinder, not two. 
The extra valve is claimed fa 
increase both power and 
torque while reducing exhaust 

prnWyrimi levels. 


turn is coinciding with an 
upturn hi the financial pres- 
sures being put on truck and 
diesel makers by Increased 
development costa. These, in 
turn, are being driven not so 
much by marketplace rivalry 
as growing environmental 
pressures and tin* ImpngHirm nf 
stricter exhaust emission con- 
trols. 

While western Europe is 
only belatedly addressing the 
-truck direa»1 yJhrtiflti IftSWP — 
until recently, legislation con- 
cerned Itself omy with the 
emission of smote as a “nui- 
sance” — much more draco- 
nian standards are to be 
applied in 1994 in the US. 
Indeed, . some manufacturers 
argue that it may not be physi- 
cally possible to meet them. 

Even among the successful 
European-owned industry, 
which bought up several of the 
best-known US producers - 
like FnughtHner (bought by 
Daimler-Benz), White (Volvo) 
and Mack (Renault) in the 
early 1980s - concern is being 
expressed abootthe likely out- 
come. 

According to Mr Giorgio 
Garuzzo, managing director of 
Fiat of Italy's commercial 
vehicles division, Iveco, more 
than one-third of the cost of 
Hrerfgntng a new heavy truck 
diesel is now incurred in meet- 


ing pollution control factors. 

Mr Sten Langenios, presi- 
dent of Volvo Truck, suggests 
' that, is the magnitude of 
product development s pending 
now required, “a consequence 
will be the restructuring of the- 
truck and track component 
industry world wide”. 

Inevitably, the development 
burden Is failing most heavily 
on those truck-makers who 
have remained heavily verti- 
cally fnfagwifari- Black Trucks, 
far example. stiS sorting out 
long-term product rationahsa- 
Ha n with P 1 ™" 1 *, has traded 
at a loss throughout this year, 
as a result of the US market 
slump’s coinciding with the 
cost of launching several new 
products. 

While the larger, fitter corpo- 
rations, like Daimler-Benz, the 
world’s biggest heavy truck 
maker, r * TT1 be expected both to 
weather the raining storm «wd 
continue to produce its big die- 
sels in-house, the mounting 
pre s sure s make ft likely that 
second-rank truck-makers 
increasingly wQl source their 
engines from the specialist 
engine producers such as Cat- 
erpillar, Navistar (formerly 
International Harvester, and 
also one of North America’s 
biggest heavy truck makers) 
and Cummins Bn gi™- 

FSnn evidence that this can 
be a highly successful strategy 


is provided at one end of the 
scale by Paccar, the Seattle- 
headquartered maker of Peter- 
bilt and Kenworth heavy 
trucks, which became North 
America’s largest indigenous 
producer in the over-16 frmnoa 
gross vehicle weight sector last 
year. 

Paccar regards as one of its 
greatest strengths the fact that 
it buys in most if its mechani- 
cal comp one n ts. The aggrv'fatpd 
lade of overheads has helped to 
provide it with one of the most 
consistently profitable records 
in the industry. 

At the other end of the scale, 
the small independent British 
truck-maker. ERF, has trans- 
formed its fortunes in recent 
years by moving away from 
being what its rhatrman, Mr 
Pete r Foden, described as a 
“fruit salad” truck- maker This 
entailed offering customers vir- 
tually any combination of 
bougnt-in engine, transmission 
and axle they wished. By stan- 
dardising around Cummins 
engines, Eaton gearboxes and 
Rockwell ariea, ERF bats man- 
aged to combine m m* simpler 
assembly, and hence lower pro- 
duction costs, with some econ- 
omies of scale in purchasing. 
For its part, Cummins inevita- 
bly has come to regard ERF as 
a considerably more valued 
customer. 

Caterpillar, Cummins and 



Mack Trucks has baan sorting oat prod u ct t— ooal— tton 


other engbm-makers can argue 
that, by specialising in engine 
production for supply to a 
broads pread of customers, 
their mw benefit from 

a higher level of investment 
and research and development 
effort than might be the case of 
a track-maker seeking to meet 
merely ha own volume needs. 
The argument is similar to that 
used successfully by other key 
truck component makers. 
likeEaton Corporation in the 


case of transmissions and 
Rockwell (axles). 

“It stands to reason that no 
single truck-maker can sanely 
argue that it has the best 
engines, all the time,” accord- 
ing to a senior engineer with 
o ne W est Goman truck manu- 
facturer. 

One example of such inten- 
sive development was unveiled 
in Frankfurt last month by 
Navistar of the US - what the 
company claims to be tbe 


world's first “smokeless" truck 
heavy diesel engine. The unit, 
which is still under develop* 
ment, will be folly capable of 
meeting even the draconian 
1994 emission standards, 
according to Mr J ohn Horne, 
vice president and general 
manager of Navistaris engine 
and foundry division. 

The engine's key features 

include: a high-pressure elec- 
tronic fuel -injection system; 
impro ved combustion chamber 
design for bettor fuel/alr mix- 
ing; new component designs to 
minimise lubricating oil pene- 
tration into tbe combustion 
chamber. But potentially most 
important Is a new type of cat- 
alytic converter, to reduce par- 
ticulate emissions instead of 
the particulate “trap*’ - 
requiring accumulated particu- 
lates to be periodically burned 
off - which much of toe indus- 
try is developing. 

In order to meet the 1894 
standards, the engine must 
also have external help, in tho 
form of diesel fuel with a 
reduced sulphuro content, in 
order to prevent “poisoning" of 
the catalyst. However, this 
should not be a problem as US 
federal authorities are making 
such fuel mandatory for diesels 
in on-highway use in 1994. 

Tbe new engines, designated 
the “International "94 Smofce- 
IcssDiescl”, will go Into produc- 
tion In 1992, initially without 
the catalytic converter system. 
However, this will be intro- 
duced in 1994 — lust in Hwm* 
for the tightening of standards. 


market 

to*? 

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sur- 
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r'our 



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TO A SINGLE HIGH QUALITY STANDARD? 


A 


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Diesel and spark ignited engines from 85-6660 bhp. 





CATERPILLAR 

The engine that pays a lifetime bonus. 

CATERPILLAR OVERSEAS SJL 76, mute de Frontenex, 1211 GENEVA 6, Switzerland. let (022) 737 44 44 


i 



IV 


FINANCIAL TIMES THURSDAY DECEMBER. 7 -1989 


DIESEL ENGINES INDUSTRY 4 


A quiet time on the land I Devaluation looks essential 


THE MAIN off-highway 
sectors, agricultural and con- 
struction equipment, both 
experienced disastrous slumps 
at the start of the 1980s, which 
led to significant mergers and 
regroupings in the industry. 

However, their subsequent 
experience has been very dif- 
ferent. Booming levels or con- 
struction activity in the devel- 
oped world have made the late 
1980s a buoyant period For this 
sector, which takes almost 

750.000 diesels a year. 

In the agricultural sector, 
the slump seems likely to con- 
tinue. After many years' 
decline, volumes are flat, with 
free-world demand for tractors 
(excluding compacts) stuck 
around the 600.000-unit level 
for the last three years. 

Despite plant closures and 
mergers, most notably that of 
Case and IH. agricultural 
equipment markets remain 
highly competitive, and pros- 
pects look bleak, particularly 
for the smaller companies. 

Engine supply for the major 
manufacturers is almost ail 
captive - both Deere and Ford 
New Holland produce their 
own engines; Case IH uses the 
IH engines, plus the Case/Cum- 
mins ranges: MF fits its Per- 
kins subsidiary's units in all 
tractors; and Fiat uses engines 
from Iveco. its commercial 
vehicle group. 

Recently, the industry has 
been in a quiet period, in terms 
of major engine developments, 
but evolutionary progress has 
continued to be made in engine 
performance. For example. 
Case IH, in West Germany, 
recently ran one of its latest 
combines powered by an NCE 
(C Series) engine alongside a 
three-year-old unit, and found 
that the new machine recorded 
a fuel consumption 6 litres per 
hour lower than- the older one. 

The main change on the 
horizon is the expected tighten- 
ing of emissions regulations. 
The shape and timing of these 
developments is unclear, and 
will depend on how severe the 
final regulations are in the 
vehicle sector. However, the 
major manufacturers are 
expected to achieve the new 
goals -without major problems. 
Of the five majors, MF and 
Case IH are likely to have the 
easiest passage, because they 
already have access to the lat- 
est generation of vehicle-based 
engines - MF. through Per- 
kins Phaser/ 1000 series, and 
Case IH through the Case/ 
Cummins NCE (B and C 
Series) engines. 

For the second-tier manufac- 


turers. new legislation could be 
the straw that breaks several 
camels' backs. Companies such 
as Fendt and Holder, in West 
Germany, have hung on 
through the 1980s, relying on 
their strength in niched domes- 
tic markets; but. with outside 


produced in three locations - 
Rocky Mount. Darlington and 
Neuss. 

One interesting feature sepa- 
rates the agricultural sector 
from both the other off-high- 
way and the on-highway sec- 
tors - its relative immunity to 


MICHAEL HAIGH considers the supply of 
engines in the agricultural and construction 
sectors, with their contrasting outlooks 


engine suppliers who are not 
in the forefront of vehicle envi- 
ronmental developments, they 
could well disappear before the 
1990s are far advanced. 

Renault may stay in busi- 
ness, simply because the over- 
all group is controlled by the 
French Government, which 
will not want to see the coun- 
try's only significant manufac- 
turer go. On the other hand, 
problems elsewhere in this pre- 
dominantly automotive group 
may push the Government into 
allowing the closure or dis- 
posal of this fringe activity. 

Deutz is much more deeply 
committed to the agricultural 
sector;but. even in combina- 
tion with Mecedes-Benz, its 
prospects are not good. Also, 
dec linin g volumes or complete 
closure at Fendt or Renault 
would trouble the company, as 
they are the only significant 
customers for its water-cooled 
engine subsidiary, MWM. 

In terms of new products, 
the major recent event has 
been the new 7100 and 5100 
tractor ranges from Case IH. 
These were launched in north 
America in 1989, and are due 
on the European markets in 
the first half of 1990. All the C 
Series engines for the larger 
(7100) tractors are sourced 
from the Case/Cummins joint- 
venture facility, at Rocky 
Mount in the US. Those for the 
5100s come from Neuss, in 
West Germany, which mAan-a 
that the B Series is now being 


W 


Japanese penetration. 

Although the Japanese domi- 
nate the under-30hp mini-trac- 
tors and other small equip- 
ment. they have made virtually 
no progress with larger 
machines. This is largely 
attributable to the problems of 
establishing effective product- 
distribution and servicing in 
the ultra-conservative farming 
sector. 

In the construction equip- 
ment sector, large areas are 
dominated by OEMs (original 
equipment manufcturers) with 
captive engine supply. Thus 
Caterpillar and Komatsu, the 
two giants of the industry, 
make their own engines. Nev- 
ertheless. there are opportuni- 
ties for outside suppliers, even 
with these leaders. In recent 
years, Perkins has added Cater- 
pillar backhoe loaders to its 
long-established supply of 
engines for Cat's FLTs, despite 
the launch of new smaller Cat 
engines. Komatsu has also 
selected Perkins, to power the 
excavators it builds at Caterpil- 
lar's old plant, at Birtley in the 
UK 

’ Further opportunities for 
supply to Japanese plants in 
Europe may occur, as Komatsu 
has recently taken a major 
stake in Hanomag, of West 
Germany, and Furukawa has 
absorbed parts of Dresser's 
European operations in Ger- 
many and France. These 
moves follow the earlier tie-up 
between Hitachi and Fiat, 




The agricultural sector is experiencing a fallow period 


which has seen the establish- 
ment of a new plant to build 
Japanese-design excavators in 
Milan. 

The smaller end of the mar- 
ket has seen something of a 
swing from air- to water-cooled 
units, particularly as mini-ex- 
cavators. largely developed by 

the Japanese, and skid-steer 
loaders have at last gained 
acceptance as useful tools for 
smaller projects and confined 
sights. Generally, the Japanese 
engines hare come from the 
agricultural sector. 

This swing has been paral- 
leled by developments in 
Europe, most notably the 
launch of Lister-Pe tier's new 
Alpha range and of Deutz's 
1011 series, both of which wait 
into production in 1988. The 
Alpha series consists at 2- to 
4-cyllnder engines in both 
water and air cooled versions, 
which have already gained 
acceptance with West German 
OEMs. 

Deutz's new engines feature 
oll-cooling of the cylinders and 
air-codling of the heads. This 
year's Bauma exhibition fea- 
tured several west German 
OEMs, displaying equipment 
fitted with the new 101L Such 
new engines represent a move 
away from single-cylinder air- 
cooled units with their rough, 
heavy and noisy image. 

Noise remains one of the* 
main concerns of the industry, 
particularly in Europe as EC 
regulations have tightened. 
Here, engine manufacturers | 
face a difficult decision as to 
how far to go with the engine, 
which is the principal noise 
source in most types of equip- 
ment Manufacturers of basic 
generating sets will often 
expect the engine manufac- 
turer to bear the full burden on 
noise protection. On the other 
han d, OEMs producing equip- 
ment such as compressors 
often have a design which 
encapsulates the engine quite 
well, thus needing far less sup- 
port in this area from the 
engine designer. 

The noise issue is generating 
some interesting develop- 
ments. For example, O&K. of 
West Germany, has launched a 
new range of excavators featur- 
ing PMS (Pump Management 
System), which allows the 
machine to be switched into a 
low revolutions/low noise 
mode. These excavators dis- 
play the “Blue Angel of the 
Environment'' badge, which 
permits them to operate in 
urban areas of Germany even 
at night. 



We are a long established bias and truck unit 
manufacturer and have spare capacity available in 
the following areas:- 

* Assembly and repair of diesel engines, 
gearboxes, axles and hydraulic units. 

- Reconditioning of most vehicle engineering 
components (differentials, transmission units, 
injectors, flywheels, electrical and electronic 
units. 

* Painting of large road vehicles of all kinds. 

* Servicing of commercial road vehicles and 
passenger vehicles. 

With facilities throughout the South and South- 
East, we can assist with your engineering 
production requirements or indeed with your 
parts distribution needs. 

CONTACT: 

W S Laird, Bus Engineering Group Ltd. 

566 Chiswick High Road 
London W4 5RR 

Tel. No. 01 994 7024 Fax No. 01 747 1897 


SPECIALISTS 


* Market Planning * Market Research 

* Business Planning * Market Databases 


Serving industry worldwide with focus on 


* ENGINES * 

* ENGINE COMPONENTS * 

* DRIVETRAINS * 


POWER SYSTEMS RESEARCH 
Rue Montoy er 39, B-1040 Brussels 
TEL . (02) 523.26 05 FAX (02) S02.02J5G 

Offices in Brussels, Detroit, Mlnncapolis-SL Paul, Tokyo 


WORLD 

VEHICLE 


DISTRIBUTION 


The Financial Times 
proposes to publish this 
survey on: 

5th. March 1990 

For a full editorial synopsis 
and advertisement details, 
please contact: 

Colin Davies 


on 01-873 3512 

or write to him at: 

Number One 
Southwark Bridge 
London 
SE1 9HL 





GOOD NEWS has bees hard to 
come by in Brazil fix- a long 
time. The diesel engine indus- 
try, though, has been living 
through a golden age of rapid 
growth and impress ve profits. 

**The Brazilian market Is big 
and growing bigger, and is 
dose to world class competi- 
tiveness,” says Mr Jade And- 
rews, president of Cummins’ 
Brazilian operation. 

The leading American and 
European engine companies 
have manufacturing operations 
in Brazil, though Japanese 
companies are conspicuous by 
their absence. 

Those companies with facto- 
ries in Brazil have price, tech- 
nology and quality levels dose 
to those of their parent compa- 
nies. But profits tend to be 
higher. 

Cummins has reported 25 per 
cent real sales growth over the 
past year, and has a Ti»nda>nw 
7 per cent profit margin - 
roughly twice its US parent 
company's profit levels. The 
company has invested SlOOm 
over the past five years - 
equivalent to one-tenth of its 
world wide capital spending. 
High profitability meant the 
expansion could be financed, 
mainly out of cashflow. 

A determined export drive, 
direct and indirect government 
subsidies and a highly efficient 
local components sector 
account for Brazil's success. 
High interest rates have bol- 
stered corporate earnings, 
because the profitable private 
sector is a net investor on the 
lucrative money market, now 
paying 6 per cent real interest 
per month. 

Between 1985 and 1389, Bra- 
zilian diesel engine production 
increased by 47 per cent, to 

292,000 units, worth $2.03bn. 
Sales and output are projected 
to rise a further 50 per cent by 
1994. Direct and indirect 
exports currently account for 
about 30-to-50 per cent a! total 
output. 

“Both suppliers and the die- 
sel engine Industry had to 
export or stagnate in the early 
and mid-1980s when the local 
market dropped.” said Mr And- 
rews. “Although exporting 
hurt, it made us become com- 
petitive to break into the world 


market Now we’re reaping the 
benefits.” ' ' 

A strong presence in the 
local and export markets 
reduces business risks in the 

notoriously volatile Brazilian 
market. Inflation, bursts .of 
rapid growth followed by stag- 


US suppliers.” ,> - 

But the future locks less cer- 
tain. A new president win take 
office in Man*, following elec- 
tions on December 17. An over- 
valued currency and a gradual 
reduction in government 
industrial and export subsidies 


COUNTRY PROFILE: BRAZIL 

. . □ 

The country's diesel industry has been living 
through a golden age, says JOHN BARHAM. 
But can if last? The Economic outlook Is always 

cloudy, and executives avoid commenting 

on their Industry’e'.outlook^vvj 


nation, unpredictable govern- 
ment policies and often, strict 
price controls, have made Bra- 
zil the world's least predictable 
economy. Businesses have vir- 
tually given up long-term plan- 
ning. A Sao Paolo , investment 
banker commented that “long 
term means up to the end of 
the month". 

Highly efficient and low-cost . 
components, produced almost 
entirely by efficient Brazilian- 
owned companies, are a signifi- . 
cant factor in the multination- 
al-dominated sector's export 
successes. A 1988 report by 
Long-Term Credit Bank of 
Japan syVI that the Brazilian 
casting industry operated at 
possibly the lowest cost in the 
world, while delivering very 
high-quality products, 
although design capabilities 
were iwnifnrfpnt . 

Castings axe a major compo- 
nent of diesel engines. Brazil's 
leading component manufac- 
turers are considered to be 
among the most pffiHan t in the 
world. They develop technolo- 
gies locally, and have become 
increasingly involved in com- 
ponent design for their clients. 
Low raw materials and labour 
costs enables them to deliver 
products that are as cheap as 
they are well made. 

An American company 
report stated: “Brazil has ' 
become a fantastic source for 
high-quality, low-cost engine 
parts. This is a Mg source of. 
our corporate cost reduction in 
resourcing away from Japan, 
West Germany and Inefficient 


are eroding Brazil's ttmeh- 
vaunted export competitive- 
ness. 

After a decade at growth and 
investment, the industry 
expects a pause in expansion 
next year. Furthermore, the 
prospect of a recession in 
export markets and further 
jobs in the volatile domestic 
market are adding to the 
uncertainty. 

Electricity prices, a 1 major 
input in the component indus- 
try, are set to rise. Worse, 
there is a ride that supplies 
could collapse within two 
years in Brazil's industrial 
heartland. The government has 
held electricity prices down, in 
the vain hope of controling 
inflation, handing industrial 
consumers an important cost 
advantage. Bafiex, an impor- 
tant government export sub- 
sidy,' is to be phased out by the 
end of the year. 

The Befiex scheme offered 
exporters cash rebates . and 
duty-free imports, in exchange . 
for meeting pre-established 
export targets. However, 
exporters say the end of the 
subsidies is less of a problem 
than the overvalued currency. 

Brazil’s new cruzado Is reck- 
oned to he 2540 per cent over- 
valued, which has made 
exports too expensive. Thus 
companies think exports could 
being stabilising and local 
sales rise, pushing annual 
sales over.SSbn by:i99£ ‘ 

Mercedes Benz and Ford are 
tiie largest diesel engine manu- 
facturers, with annual produc- 


tion .of 70,<W , imlt5'each, equlv- 
• alent to about half.of the total 
market. 

Mercedes has begun a $300m 
investment programme to mod- 
ernise its engine and truck 
models,' with an improved 
medium -duty engine hitting 
the market this year. The com- 
pany plans increased engine 
exports to the US to power 
Fragbtlmer trucks. 

At present. Ford produces 

70,000 engines a year, but is 
. increasing production capacity 
to 100,000 units to meet rising 
demand for trucks and agricut- 
■ tural tractors- produced" by its 
Ford New -Holland (FNH) divi- 
sion. The company exports 
engines indirectly through its 
export of file Cargo truck. But 
exports are planned to end in 
1990, because the overvalued 
currency has raised costs in 
dollar terms. 

Caterpillar is the leading 
independent producer, with 
annual sales of over $500m. It 
dominates the industrial equip- 
ment segment, but its products 
are considered outdated. Cater- 
pillar plans to invest 8500m In 
Brazil, to update Its product 
lines, modernise and consoli- 
date manufacturing. 

The Japanese have avoided 
Brazil so far, and their policy is 
unlikely to change. Brazilian 
officials have tried to woo Jap- 
anese investors, but have yet 
to overcome their reservations 
about chronic instability, 
investment controls and 40 per 
cent monthly inflation. Toyota 
is tiie only Japanese vehicle 
manufacturer in Brazil, where 
it makes tracks and jeeps. 

Since the outlook in Brazil is 
always cloudy, at best, execu- 
tives avoid commenting on 
their industry's outlook. How- * 
ever, they accept the need to 
bring electricity prices, interest 
rates and subsidies down to 
earth. But they insist that the 
next ' government - which 
could be led by a mfiitautly 
left-wing or a centre-right pres- 
ident - must devalue the cur- 
rency to avoid discouraging 
exports. 

“We have competitive costs,” 
says; Mr" Andrews. * “All we 
need, to remain competitive, is 
a 15 per cent devaluation, or 
the industry will stagnate.” 


Producer profiles appear below and on pages 5 and 6 

Peugeot becomes the Buy-out at VM Motori 
bellwether of change will ‘liberate energy’ 


Mr Jean- Yves Helmer, the 
quietly-spoken director of Peit, 
gent's automobile division, ia 
confident about the prospect s 
far the French car grouper dfe- 
sd engine sales, where it is 
the world’s largest supplier. 

Looking younger than his 43 
years, this product of France's 
top engineering academy, ges- 
tures with his broad hands as 
he explains: “More people are 
beginning to realise that this 
is a product with a solution to 
several problems, that diesel is 
good for the environment and 
good for the preservation of 
natural resources.” 

Peugeot sold ZU per cent of 
the l.8m diesel vehicles 
bought in Europe last year, 
powered by engines made at 
Its three diesel plants In the 
northern French towns of 
Lille, Tremery and Donvrin, 
That was a 3.4 per cent 
improvement in its 1987 mar- 
ket share, leaving its nearest 
competitor, VAG, far behind, 
with 25-2 per cent, followed by 
Flat with 1&2 per cent. 

This makes Peugeot - 
which also sells diesels for 
cars made by other pzoueexs, 
like Ford - the most revealing 
bellwether of broader changes 
In the diesel market 

Mr Helmer, formerly direc- 
tor of Peugeot's huge car 
assembly plant at Poissy, took 
his present job a year ago, at a 
hard time In thle notoriously 
volatile market Sales were 
beginning to fall sharply is 
West Germany and Italy, 
under the twin influence of 
adverse tax rules and environ- 
mental fears - ill-founded, 
believes Mr Helmer - about 
the damage to human health 
caused by diesel pollution. 

Those problems still exist, 
but a big new opportunity - 
could, at the same time, be 
opened up by the European 
Community's decision to adopt 
tough US-style rules on car 
exhaust emissions. Meanw hile, 
a European Commission pro- 
posal to harmonise rates of 
diesel fttel tax could considera- 
bly ease Peugeot's access to 
what Is now a deeply frag- 
mented European market for 
diesel engines. 

The cost of equipping pet- 
rol-driven cars, tn comply with 
the new EC ex hau st politrtion 

rules, will considerably reduce 
the price advantage they now 
have over more expensive die- 
sel cars, argues Mr Helmer. 
Most Peugeot engines already 
comply with EC rules on gas 
and particulates emissions, 
and so win not need modifica- 
tion. This means the average 
15 per cent price gap, which 
sow separata diesel and pet- 
rol cars, could fail as low as 5 
Per cent, estimates Mr Helmer. 

The Commission proposal on 
diesel fad - yet to be adopted 
by member states - would fix 
taxes within a uniform band of 
Ecnl95-205 per i ,000 litres. 
This is a lot higher than Peu- 
geot would like, and would 
drive up current diesel tael 


prices in France, Belgium and 
.the Netherlands, if accepted by 
the 12, believes Mr Helmer • 

: Yetitwffl. create YeffiSctforis 
elsewhere, and, most Impor- 
tant, help the market to 
become more stable and less 
fragmented. Market, stability ; 
matters crucially; because die- 
sel engines are costlier and 
take longer to develop than 
petrol engines. 

Peugeot has -always found 
that the diesel engine market 
is more vulnoaMe than petrol 
to political fasces outside its 
control, something which 
occupies much of Mr Hd.mer's 
time in the farm of visits to 
Brussels to try to gmiain to 
the Commission some of the 
advantages and special prob- 
lems of dieseL This volatility 
can be an advantage, as was 
the case after the 1973 oil 
price abode, when consumers 
flocked to buy diesel cars 
attracted by the fact that they 
use on average 25 per emit less 
tad and last 5tt per cent longer 
than petrol-driven care. 

The big problem comes from 
different public perceptions 
about engine performance and 


AFTER 18, years, to public 

ownership^-as -ai -subsidiary of 

of Italy’s lRr state holding cor- 
poration. VM Motori is return- 
ing to the private sector. • 

- A management buy-out, 
organised by Milan merchant 
bank Euromobiliare, is expec- 
ted to be completed by the end 
of the year. . 

■ Eight senior executives, led 
by chair m an and managing 
director Mario Brighigna. will 
together have a stake of 
between 10 and 15 per cent in 
tiie company. 

Considered a fair performer 
under IRI, Euromobiliare 
believes , that VM Motori will 
do better when released from 
state-sector constraints and 
bureaucracy. “Belonging to the 
private sector will be a signifi- 
cant incentive and will liberate 
untapped energy within the 
company." says Mr Brighigna. - 

He joined the company as 
general manager in 1967 - 20 
years after its foundation. 
Under his leadership, VM 
Motori diversified. from Indus-' : 
trial diesels into the automo- • 
tive field. The company 


pollution. “From the point of launched its HR engine in 1978, 
view of ga« emissions* diesels achieving a .world first with . 


produce the same as petrol the use of turbo-diesels In cars, 
^fitted with a regulated The HR series has allowed 

catalyst And particulates are VM Motori to win important 
not a problem in modem customers. The 8-cylinder 
engines/* says Mr Helmer. ’ 392SHT-R is fitted in Alfa 
n« ** *? Romeo’s Aha 33 modeL Larger 

mw Qttroen XH Turbo Diesel en gines power the Alfa 75 nnH 
- Citroen and Peugeot belong the. more recent Alfa 164. Ans- 
to the same group, PSA — tin Rover chose the Italian 
S paWe £ company *» supplier for its - 
the world's first diesel with SD-1 saloon in 1981. But use of 
three valves per cylinder. - the HR series in 4-wheel drive 
It is no surprise that the. vehicles been even wider, 
pragmatic French are tar more Engines built by VM Motori 
open to diesel's advantages power Ranger Rovers, Toyota's 
than many of their European. Land Cruiser, AMC's - Jeep 
neighbours. Ware! cats’ share Wrangler, GMC’s Jimmy S15 
of the total French car market Sierra and the Uaz 469B. 
nearly doubled over the past with nearly 60 per cent of 
four years, from 15.7 per cent production being fitted to care 
in 1986 to an expected 28.5 per and 4-wheel drive verities, the 
cent this year, accanfing to tiie automobile sector is of primary 
French car makers’ associa- importance. And foreign safes 
tUm, the Chambre Syndicate are also crucial; direct exports 
des ConsLructecus d* Autom o- account for 30 per cent of pro- 
biles. That l* bettered only by duction and a further 30 per 
Belgium, diesel takes 31 cent goes abroad Indirectly. Mr 
per c ent o f the marke t ; Brighigna says that having no 

In enrironraentaHy^anriaus captive customers for m p™ 
West Genaany, by contrast, provides a continuous stimulus . 
diesel cars’ -slarket share has for seeking improvements in 


crashed from 27 J. per cent to coat and performance. 

10.3 per cent since 1986 r? Modularity is one of the fea- 
with the biggest fall in the' tores of VM Motori's 
past two years - while the < which have common modules 


figure in writatn has cl i mbed 
slowly from a tiny 4J. per cent 
to SJS per cent 
This volatility and fragenta- 
tion might help to explain why 
this is one of the very few 
areas in the automotive mar- 
ket where the challenge Iran 


of cylinders, pistons, connect- 
ing-rods and heads. The HR 
series offers engines having 
from three- to 6-cylinder mod- 
ules, giving commonality of 
about 79 per cent This' allows 
greater quality consistency in 
-production, and easier rnabzte- 


Japanese competition is negU- *nance and reduced stocks of 
gihfe . Mr Helmer hs no doubt, spares fin* the user. 


however, that Japanese corpo- 
rate planners win be watching 
the impact at the new EC pol- 
lution rules tad the fortiuMaK 
ingfuel tax changes with mgs* 

than usual cafe 


William Dawkins 


»• About 3 per cent of turnover 
eg is spent on research and devd- - 
d1- opment, to help the company . 
Sir stay With, or ahead of, competi.- 
Rl 'tors. Emission-.. and noise-re- 
duction, and lower fuel con- 
' spmption are priorities, 
is » got, as visitors to the Paris 


air sbow Teamt this summer, " 
'VM' Motori's R&D group has , 

- been cxploring the wider fron- • 
. riers^of aircraft propulsion. The 
■VM-Avio project has given 

birth to a series of three turbo- 
charged compression Ignition 
. engines, suitable for powering 
light aircraft.- The 4, 6 and 
^cylinder TPJ 1300HF series 
provide a power range from 210 
to 430 horsepower. 

Using Jet A-l and JP-4 fuels, 
VM Motori’s experimental die- 
sel aero e ngi ne s give a reduc- 
tion of between 40 and 80 per • 
cent on specific fuel consump- 
tion, compared with equivalent 
petrol types. In addition to 
offering substantial improve- . ' 
ments in range and payload, 
the diesel aero engines have 
.tiie advantage of significantly * 
longs' time between overhaul. 

. -. Mr Brighigna says that the 
results of testing show clearly 
that: the company’s aero proj- 
ect offers a feasible alternative 
to 'existing e ng ines. However, 
.until this project gets airborne 
. commercially, VM Motori ’ 
keeps down -.to earth with its - 
automotive series and the die- 
sel motors it sells to marine 
industrial users. 

The company's air and 
. water-cooled engines are used 
in agricultural machinery and 
tractors, earthmoving equip- 
ment, air compressors, generat- 
ing and pumping sets, and for 
marine propulsion. Claiming 
European leadership in the die- 
sel sector, VM Motori says that 
its V130 550hp engine, used in 
generating and pumping sets 
and for large industrial and 
marine propulsion, is the 
world's most powerful air- 

- cooled rffpqgi 

Such .technological perfor- 
mance ; is- starting to be 
matched by financial results. 
Last year, VM Motori recorded 
a profit of L2Jjbn (£l.?.np on 
L293bn safes, its third succes- " 
sive profitable year. In 1985, 
the company's L26bn losses 
were equivalent to about 13 per 
cent of turnover. Getting rid of 
loss-making subsidiaries 
Ducatt Meccanica and Isotta 
Fraschini was fundamental to 
. the turnaround. 

. -Reflecting healthy demand 
for* VM Motori’s products in an 

- increasingly competitive mar- 
ket* the workforce at the com- 

. pany*sr Cento factory mid-way 
between Bologna and Ferrara 
has increased: 

"This year has gone well, 
and results are on budget," 
says Mr Brig higna . With senior 
debt of L30bn and subordinated 
debt of L35bn entering the bal- 
ance sheet alter the MBO it 


now should keep on tract 
;“b>Uare has carefully 
vetted VM Motori's five-year 
Plans and, finds them 
«s*remely interesting. That the 

future seems- bright provides 

nutation* stock ' maf k e t 
1994 betwe en 1992- and 

David Lane 







V 


! 


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EINANCIALTIMES THURSDAY DECEMBER 7 1989 


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( DIESEL ENGINES INDUSTRY 5 ) 


■ PERKINS has made impressive progress, rebuilding its volume base 

i .Vi. s T y v. * 1 Ci . ' ... ", 1 ; . . _ ■ ■ — j 1 ... 1 . * TT | 1 11 ... 

Advancement in difficult markets 


THE _ 1980k . has been .a 
tr a um a tic decade tor the lead- . 

diesel 

engines.;. '*' ; 

riehcecl fajtfl 
market sectors; creating huge- 
amounts , of excess capacity, 
much- of which has/ perslsfed 
ever since. 

Looking back.' ope of Che 

meat snrptWbjg; things '» that 

PerHtis Tfrighw Tntw a x mvflA , 

leader; la'ifieaeL ^qgmes.V&ZIL 
exists as a distlnd: entity.' 
When the slump hit," almost, 
half, its- business was in the ' 
agricultural sector, dominated, 
by supplies to its parent com- 
pany Massey. Ferguson (now 
Vanty Corporation): . 

The coll^se of MT s worM- 
wide agriculture! markets; coo- 
pled with the slump hi -the cost-, 
struetkm sector into -winch it 
had ' moved: Very - heavily, 
brahght the group to -the frrfnk 
of r coIlapse_It- snrvfye<i inly 
after one of the mnfr fc £fifEhyng ~ 
tog series of multi-bank res- 
cues ever seen. 

Perkins remained within MF. 
but its engine output slumped 
torn * peak of 2B9J300 in 1376 


loonlyJSO^ in 1985; factories 

were closed in the IB and West 
Germany; -the workforce was 
halved, and new Investment 
halted. ' 

Since this lowDotat. Perkins 
has manage to modernise and 
extend its produet range, 
invert: in advanced mannfec- 

tarrmy (itv«hii«Tig fatly 

automated engine test cells 
with AGVs to move engines) 

— WP«P— ■ y ■■■■■ I 

The revampfrtg eflhe . 
product range has 
been achieved 
through a combination 
of measures 

and nwlfB impressive progress 
with tbe rebtdlding of its vot 

^ r mf > base. 

Last year, its own teeffities 
produced almost 190,000 
engines and worldwide sales 
hum the UK, add its IS over- 
seas associates/licensees 
approached 450,000. Revenue 
was not groom, and opesat- 
Sew profit topped $65m- Tony 
Guray, who Joined Perkins in 
January as managing director, 


expects final UK volumes in 
1989 to show a 50 per cent 
increase from 1966 levels. 

The revamping of the prod- 
uct range b e* been achieved 
through a combination of 
in-house development, acquisi- 
tions joint ventures. Per- 
kins traditional 50-200 +hp 
product range now features 
advanced new 4- and freyfioder 
(four/six litre) engines - 
Phaser/1000 Series - pins the 
2-litre Prima engine, which 
was originally developed for 
car and light van use with 
Rover ana has -sow been 


and has sow 
adapted for tn rfmrtr iai iwiri con- 
struction markets as the 500 


The bottom end of the power 
range has been extended 
through a Joint ventur e with 
ISM, of Japan. Perkins now 
uses ISM’S 2r, 3- aod 4-cyBnder 

small water-cooled units from 5 
to 45hp. At the top end, powers 
have been extended to l^OOhp 
through the acquisition of 
Vickers’ Rolls-Royce diesel 
division with its 22.2 litre 
engines for heavy truck and 
industrial use and its larger 
V8s and V22s. 


With these larger engines 
lyiq come a major of 

Perkins business and 
know-how in the military Bee- 
tor. The company is now the 
British Army's power unit sup- 
plier for tanks , tank transport- 
ers and the Drops front-line 
ammunitio n delivery vehicles. 
Perkins has also acquired the 
Gardner company with its 
low-volume, but highly 

Strength elsewhere 
means less than 25 
per cent of business 
will be In the 
agricultural sector 

regarded, long-life, premium 
bus, track and marine e ng in es. 

Restructuring is efen under 
way in one of the company's 
traditional key markets - 
north America. Under a joint 
v entur e with DDC (Detroit Die- 
sel Corporation, formerly the 
diesel engine operations of 
GM*s DDA), Perkins is merging 
its US distri bu tion into DDC*s- 
Ttns gives the company access 
to ft zll distributor coverage to 


north America, lack of which 
has always limited its aspira- 
tions there. It may even pro- 
vide the scope for Peridns/DDC 
to tackle the north American 
truck sector on a carefully 

niched ba yty . 

The recovery of Perkins’ core 
volume base In its important 
west European markets h gq 
been built on a number of suc- 
cesses with major original 
equipment manufacturers 
(OEMs), notably JCB and Cat- 
erpillar backhoe loaders and 
Rover cars/light vans in ths 
UK. 

More recently, progress has 
been made in the two most dif- 
ficult major markets in the 
world - Japan and West Ger- 
many. Komatsu is fitting 1000 
Series engmes in its UK-built 
excavators, and Perkins’ Japa- 
nese partner ISM is now taking 
the same range for use in its 
tractors to the Japanese 
domestic market. In West Ger- 
many, Perkins has recently 
won an order to supply 1000 
Series engines for a new fork- 
lift truck range from Linde, 
Europe’s largest FLT manufac- 
turer. 



Assembling tractor engines at the Perkins factory. In Peterborough 


The extent of the progress 
made since the black days is 
shown by the fact that strong 
growth to the construction, 
industrial and vehicle sectors 
means that less than 25 per 
cent of its business will be in 
the agricultural sector this 
year. 

Mr Gilroy a ttribu tes much of 
this success to the company's 
reorganisation into six busi- 
ness units: Peterborough prod- 
m^Shrewsbtuy products and 


defence sales; Compact engines 
(545 hp); Gardner, Power Sates 
and Service - for distributor 
sales and the after-market; and 
Perkins Technology, which 
provides engineering services, 
both internally and to more 
than 150 outside companies. 

He is convinced that this 
structure generates real 
accountability, and focuses 
each area's attention on pro- 
viding a total service to cus- 
tomers with fast reaction to 


changing demands - thus 
meeting users' growing con- 
cern with overall operating 
costs, rather than simply ini- 
tial selling price. 

This strength, he believes, 
will keep Perkins ahead of the 
competition and allow It to win 

further significant new busi- 
ness accounts in all sectors, 
including the rapidly reshap- 
ing European vehicle markets. 

Michael Heigh 


LOMBAEMNIIs Italy’s largest 
. producer of . small , diesel 
engines. At its. Reggio. Eraffia 

pbwfcg/ Tha rnmpavvy rolohraioH 

the .production of its 3 mil-' 
Month engine at the end of 
1986, and has therefore bout . 
Inx unfis-aince. 198QT 
Manufact uring principally 
single , and muM-cylinder 
engines of air-cooled design 
below SOfcWj it produced over 
131^00 .unite to 1988. Although, . 
output m 1989 will be of the 
same tm ia; th e trend to multi- 
cylinder engines should ensure 
turnover gains of between 10 
and X5. percent. 

The c n Tnp any V tradition hoa 
been the Italian domestic 
engine market for specialist 
agricultural equipment in 2- “ 

are sold to theagricultnral 
equipment sector. 

to the test 10 yens, however, 
its sales for -generator sets, - 
mini cars and off-highway 
equipment have grown. At the - 
same time, itrhasestablished' a “ 
significant presence- in other .. 
European north American 
country markets. * * * 

One diesel engine in six paw- . 
ers a ' generator , set,-: with '* 
ohnnKt the volxmie des- 


LOMBARDINI has established a presence outside Italy, and has recently launched 

New runners in the water-cooled race 


allowed the Japanese to move 
out from niche areas of the 
market. 

The European industry 
under esti ma ted the 


ttoed for construction equip- 
ment Together, mini-care and 
industrial applications account 
for the bulk of other sates. 

According to PRS i 
Group, the engine 
consultants, 110.000 diesels 
were produced at Reggio Emt 
ha. The remainder were built 
by the Italian subsidiary 
(Stenzi Motor SpA) and Hispan- 
omotor, of Spain — Lombardtoi 

acquired frill control of Hispan- 
omotor this-. year. 

' Thirty-five per cent al output 
directly, a third of 
js sold outside western 
to north Amer- 
ica. Lombardtoi also markets 
gasoline engines produced by 
its totermotor subsidiary: cur- 
rent output is ahout 90,000 
unite per annum. 

FES estimates that produc- 
tion of urn-automotive 
engines below lOQhp to west- 
ern Europe has decreased by 12 
per cent since 1384, to some 



yAm Tmtea to 1968. Lombardi* 

Zd'S w n tp mt. haw ita*Unw| mafnTy 

b ecaus e of the de press ed 
nature of its domestic market 
tor small agricultural and 
lawn/garden equipment Lower 
rates of equipment-replace- 
ment and growing gasoline 
penetration in some sectors 
have affected diesel sales- 
Lombardtoi competes with 
other major Eu ropea n produc- 
ers, Hate and EHD, of West 
Germany; Lister-Fetter, of the 
UK; and its rival to the dome* 
tic market, Ruggsrini 
to the 1960s, competition has 
intensified through a growing 
Japanese presence in the west 
European market. The strate gy 
of Japanese companies has 
been to compete principally in 
finis hed equipment, rather 
than loose engines. However, 
penetration, particularly in 
small-engixte markets, has been 
growing, to recent years, pene- 
tratim has risen rapidly, to the 


extent that the Japanese now 
riaiw 25 per c en t at smalt die- 
sel pnfftna markets. 

While the Japanese prefer- 
ence far water-cooled engines 
haa not chang ed , Lombardtoi 

in pgrHrmlsrr had the fnrogt ght 

to mutei- talM product develop- 
ment programmes for suen 
units themselves, to late 1988, 


intn thf cylinder- 

head "block. R is the first Hwh 
that small engines have 
employed a unit injection sys- 
tem, which was developed by 
Lombardtoi themselves. 

The CHD ^cylinder engine is 
the first European-produced 
diesel engine combining 
water-coding and such 


The company believes both air- and 
water-cooled diesel engines are required, 
to compete In a wide range off sectors 


Lombardtoi introduced two 
new famlltes of water-cooled 
gngtowg FOCS (full y ove rhead 
control system) and CHD. 

These engines are of indirect 
injection design, and feature 
exclusive and innovative 
mechanical features. The FOCS 
gmgitMB include a new design 
concept with fuel injection 
equipment and valve- timing 


cylinder displacement fin- the 
25-35hp range. The unit has 
been selected by Fiat Agri for 
its 35-66 agricultural tractor. 

Lombardtoi believes that 
both air- and water-cooled die- 
sel engines are required, to 
eampgto e ff ect iv ely in a wide 
range of sectors. The above 
engine pr og ram me began in 
1988 and was accelerated to 


compete with the emerging 
Japanese presence to Europe. 
By 1990. 10 per cent of Lombar- 
dinl's engine cutout will be 
water-cooled. 

Lombardtoi is also the first 
European en gine wawiifai i iM F 
to produce a multi-cylinder 
water-cooled engine range for 
such a small output range. 
Other recent developments 
include the 6LD 435 model, pur- 
pose-built to meet noise legisla- 
tion applicable to generator-set 
equipment. 

In western Europe, the mar- 
ket for small engines is mature 
and depends for growth on 
increasing gross national prod- 
uct to ofi-prodndng countries, 
demand for small powered 
equipment declined sharply in 
the early 1980s. and has not 
recovered, to other, develop- 
ing. countries there has been 
cm increase of economic aid for 
small-scale mechanisation, 
which has Improved small 


sales. 

ngine usage in western 
Europe Is well established, 
with little or no substitution 
occurring between competing 
power sources. Within the 
small diesel engine sector, 
demands for higher-powered 
units is continuing. This is 
driven by a move away from 
“walk behind" to “ride on- 
equipment, and in the con- 
struction equipment sector a 
requirement exists for more 
power take-offs. 

Engine developments in 
recent years have concentrated 
on improving noise emissions, 
in order to meet EC legislation. 
Japanese manufacturers have 
capitalised on this opportunity. 
PRS estimates that Japanese 
penetration of engines below 
SOhp has more than doubled, 
from 7 per cent in 1984 to 15 
per cent currently. Such tech- 
nical advantage, combined 
with competitive pricing; has 


demands of the end-user, 
the European Community 
itself. Lister-Fetter, of the UK. 
and Deutz, of France, have 
responded to the challenge. 
However, It is Lombardtoi that 
has sought to match the Japa- 
nese in sophistication, with 
innovative solutions. 

The Japanese have achieved 
significant penetration, partic- 
ularly In Switzerland. Austria, 
the UK and West Germany. 
Lombardlni's backyard has 
been protected from Japanese 
competition until recently by 
trade barriers, while the Japa- 
nese have concentrated on off- 
highway, agricultural transpor- 
tation, generator sets and 
marine sectors. 

Lombardtoi is well placed to 
meet further competition from 
the Japanese and others. While 
it must defend its domestic 
position, the company also 
«™k to improve sales to other 
parts of western Europe. A ful- 
ly-owned subsidiary will begin 
operation shortly to the UK. 

DavM Smflh-Ttnoy 



Innovative 

Thinking 

DEUTZ. 



The' -New Ten-Elevens: 
Reliability Beyond 
The Year 2000. 


KHD DEUTZ re-define classic 
DEUTZ qualities with the intro- 

_ duction of a new generation of 

diesel engines^ - THE NEW TBV-OEVENS. Designed to fill the lower power range from 10 to 53 kW. 

NEW - the h i teg ra te d cooling system using both air and oil: air cools the cylinder heads, 
engine oil the cyfinder liners. This prevents corrosion ami cavitation; it ensures greater 
refiabffity and even less maintenance. 

NEW - the DEUTZ direct injection system: more power, lower fuel 
consumption, greatly reduced particulate and gaseous emissions. 

NEW - the application of hi^ty-advanced R & D methods; 
to refine further the legendary DEUTZ ingenuity and reliability. 

THE NEW TEN-ELEVENS; INNOVATIVE THINKING FROM DEUTZ. 


KHD 


MEN AND ENGINES 




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.1 


FINANCIAL TIMES THURSDAY DECEMBER 7 M ! _> 


DIESEL ENGINES INDUSTRY 6 


KHD 


YANMAR 


A tough road to recovery Troubled by the rising yen 

. . . . * .. . . . _ . . .. . . _ /% /f* * * riuKIll •■hmM 




A COMPANY in the West 
German engineering sector 
could certainly imagine for 
itself a better scenario than a 
125th anniversary year in 
which it is Just returning to 
the black, at a time when busi- 
ness in the industry is boom- 
ing as result of surging home 
and foreign demand. 

But Kldckner-Humboldt- 
Deutz, whose activities cover 
tractors industrial 
as well as diesel engines, is 
lucky to be even in that posi- 
tion. 

Jt has been to the corporate 
abyss, peered fearfully in, and 
managed to draw back. In 1987, 
it turned in a net loss of 
DM2S5m. having made a 
DM2Sm profit the year before, 
and one of DM57 m in 1985. Last 
year, however, it had narrowed 
the loss to DM98m, and is now 
looking forward to a small 
profit again in 1989. 

The road to recovery has 
been tough. Jobs have been 
slashed and now total 18,400, 
compared with nearly 30,000 in 
1985; capacity has been cut; 
and top management has been 
given a vigorous shak eout. 

Cologne-based KHD's biggest 
division is engines and tur- 
bines, accounting for 53 per 
cent of last year's group sales 
of DM4.5bn. The problems, 
however, lay more in the other 
areas: tractors and agricultural 


machinery (36 per cent of sales 
in 1988) and industrial plant (11 
per cent). It is In these two 

divisions that the job reduc- 
tions were severest, in percent- 
age terms. 

KHD’s history goes back to 
the earliest days o£ the modern 
un girw The group originated 
with the engine factory, the 
world’s first, founded in 1864 
by Nicolaus August Otto and 


1944. Altogether, it has turned 
out more than 5m air- and 
water-cooled diesel engines, as 
well as pro engines, since Its 
formation in the Last century. 
It hag also kept up its innova- 
tive thrust, latest develop- 
ments including engines which 
are both fuel-efficient and envl- 

ronmen tally-friendly. 

In the first six months of this 
year, turnover of the division 


The group is the biggest producer of air-cooled 
diesels in the world, having produced 4m 
- since it began regular production in 1944. 

It has turned out more than 5m air- and 
water-cooled diesel engines, as well as gas 
engines, since its formation in the last century 


Eugen Langen. Three years 
later, they presented their 
small atmospheric eas endue, 
at the World Exhibition, in 
Paris. This was the forerunner 
of the Otto (internal combus- 
tion) engine. 

In 1876, Otto finished work 
on the four-stroke internal 
combustion engine. In the 
proud words of KHD’s latest 
annual report, "the motoriza- 
tion of the world had begun”. 

Today, the group is the big- 
gest producer of air-cooled die- 
sels in the world, having pro- 
duced 4m since it began 
regular production of these In 


was 5 per cent higher, with the 
new-order inflow up by nearly 
20 per cent With the German 
construction industry, to 
which it is an important sup- 
plier, now experiencing a surge 
of activity, the group's Deutz 
Motor division has seen a 
sharp rise in business. Among 
its offerings is a new series of 
air/ofl-cooled engines called the 
B/FL 1011. This has a low-ex- 
haust emission level, makes 
less noise, and needs less main- 
tenance than previous engines. 

Another recent break- 


ally eliminates soot the device 
can be retrofitted or installed 
during the manufacture of die- 
sel-using transport or mechani- 
cal equipment 

One aspect of the engine 
business now being stressed 
more heavily is service. KHD 
has invested DM15m in a new 
service centre in Cologne, with 
parts for' all products made by 
Deutz and Deutz MWM, which 
produces large and medium- 
sized engines for ships, electric 
power plants, and public build- 
ings. Deutz Service now has a 
turnover of DM640m a year, 
with DMlbn seen as attainable. 

KHD, which suffered a heavy 
cash drain in its crisis period 
and has paid no dividend since 
1986, obviously still has a long 
way to go in Us climb back to 
prosperity. The performance of 
the engine division will obvi- 
ously be crucial. 

In 1989, the group expects 
Deutz Motor to raise its turn- 
over to air-cooled engines to 
more than DMi.sbn from 
DMldbu. KHD is certainly put- 
ting great hopes in the well- re- 
ceived ion series, which 
ranges between 14 and 72hp. 
By 1992, it expects to be mak- 
ing 60,000 of these a year - 
around double the level 
planned for 1990. 


through is the DPFS particu- 
late-filter system, which virtu- 


Andrew Fisher 


i ALTHOUGH the name is not 
; widely known outside the 
industry, the Yanmar Diesel 
Engine Company is the world’s 
largest producer of small diesel 
engines. It builds 350,000 units 
a year. 

Founded by Magoluchi 
Yamaoka, in 1912, to produce 
kerosene-powered rice harvest- 
ers, the company has grown to 
be one of the largest private 
family-owned companies in 
Japan, with a turnover in 1988 
of $3J5bn. 

In 1962, the founder was suc- 
ceeded by his sou Yasuhito, 
who died the following year 
and was replaced by his 
brother Tadao Yamaoka, the 
current president 

Yanmar produced its first 
small horizontal water-cooled 
diesel engine in 1933, with an 
output of 5hp. There was 
- immediately a huge demand in 
Japan for this engine for agri- 
cultural equipment, and a new 
factory was built at Amagasaki 
in 1936. 

Two years later, the com- 
pany began to export engines 
to the Philippines and India, 
and a second plant was estab- 
lished in Nagahama in 1942. 

Complete renovation was 
needed after the war, and Yan- 
mar started mass production of 
marine engines, which were to 
dominate the domestic market 
and eventually achieve a lead- 


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It means 


qu 



ltym 


160 


countries 


The Perkins badge on an engine stands for a lot more than 
just the name of the company that manufactured it. 

It stands for the extensive product range available. With units 
from 5 to 1500bhp powering anything from trucks to tanks, 
from boats to bulldozers. 

It stands for quality parts and service back-up across the 
entire product range. 

And it also stands for the world's largest diesel engine manu- 
facturer, with plants in 16 countries and sales in over 160. 

So wherever you go in the world you can be sure that the 
Perkins badge speaks in a truly international language. 

And means, quite simply, the best in the world 


Perkins 


Perkins Engines Ltd, Peterborough PEI 5NA.TeL-(0733) 67474. 


A business of Vanfy Corporation WtfTV 


tog market position to western 
Europe and elsewhere. 

From its origins as an engine 
manufacturer, Yanmar has 
spread into a range of compo- 
nents and powered equipment; 
including fibre-reinforced plas- 
tic boats, agricultural tractors, 
tillers and harvesters, excava- 
tors, wheel-loaders^ fuel-injec- 
tion. equipment, Iranwnjasj^na 

gnd miirhinp tools. Qg nn g )m> 

range stretches from. 3 to 
5,000hp, and includes diesel, 
gasoline, natural gas and gas 
turbine units. It now has six 
production sites in Japan, and 
also manufactures engines in 
Brazil, Indonesia and Thailand. 

Yanmar made its reputation 
in the production of small 
lightweight diesel engines for 
the agricultural, construction 
and marine markets. While the 
European tradition was to 
build aircooled units for power 
outputs of below lOhp, Yan- 
mar, together with other Japa- 
nese manufacturers, preferred 
water-cooling for reasons of 
efficiency and noise. However, 
in 1984, it moved to compete 
across the board by introduc- 
ing what was nlaimad to be the 
world’s lightest aircooled die- 
sel, particularly for the US and 
European markets. 

to 1987, it broke new ground 
again, when it Introduced a 
series of diesel outboard 
motors. These were completely 


‘.Vv 




In 1987, Ifte company brake 
new ground, when It 
Introduced a aeries of diesel 
outboard motors. This Is too 
27hp model 


new designs of weight-saving 
aluminium construction, and . 
using Yanmar’s own fiieMnjec- 
tlon equipment to produce a 
high-speed, direct-injection 
unit with a very high powerA 
weight ratio. 

In many respects, the diesel 
outboard has significant 
advantages over comparable 
gasoline units. It uses less than 
half the quantity of fuel and 
has good vibration and noise 
characteristics. Although down 
on maximum speed, the dUsel 
has much more torque than a 
gasoline engine of similar 
power, and thus outperforms it 
in full-load conditions. 

Over the past few years, 
Yanmar has been hit by the 
appreciation of the yen. From 
its peak to 1985, the currency 
rose from Y240 to the dollar to 
just Y120 in two years. This is 
equivalent to doubling the cost 
to the US customer, and has 
resulted to considerable prob- 
lems. 

like other Japanese compa- 
nies, Yanmar has redoubled its 
efforts to reduce manufactur- 
ing costs through investment 
in more advanced processes, 
and also to redesign its prod- 
ucts to make than cheaper to 
product Considerable progress 
has been made to date, but 
more tine Is needed -to com- 
plete the adjustment. 

Yanmar sees the stogie mar- 
ket in toe EC from 1992 as an 
opportunity for its products in 
Europe. The market is expec- 


ted to offer m 

demand for faigb-diiallty 
engines with low nofge and 
emissions, which' Yamaar la 
confident U can PWwfflfi, la 
order to do so, » nas setupa 
European headquarters in 
Amsterdam, initially to; deal 
with parts dfattibution and 
customer service. 

to 'addition,- thfr : ratop«nj is 

planning to complete t Off & 24 Q- 
ufaeturingaparfeettog cSrcie by 
commencing engine production 
in western £vope, at a ske yet 
to be chosen. This wSl include 
both air- and water-cooled 
units up to lOObp for agricul- 
ture, construction and marine 
applications. . ' : . 

Yanmar. already has a joint 
venture - Ammann Yanmar 
- with a Swiss company, at & 
Dizler, in. France. This pro- 
duces mintcettstTuctknt equip- 
ment. powered by engines 
imported from Japan. Van- 
mar's marketing strategy is to 
penetrate the finished-equip- 
ment market with , toe hew L 
sates air-cooled diesel - Water- 
cooled diesels will be modified 
to meet. European industrial . 
requirements. 

In the tlE, Yazdoar expects to . 
see significant growth m what 
has, so far, been a wary Hmited 
market foe small diesels/and it 
plans ta augment sales with 
local production^! the Ear 

facilities in' ,Thafiam<l and 
Indonesia, and envisages 
importing locally produced die- 
sel products into Japan. .. .' 

New product plana concen- 
trate mt improving efficiency 
and emlodons, by devetofmient 
of fuel-injection ami combus- 
tion technology,- and expertise 
within the company. Natural 
aspiration will be the preferred 
choice, and further develop 
ment of highspeed diractiniec- 
tlon designs will , help to 
achieve, maximum efficiency. 

In the longer term* Yanmar 
is in vetoed toe Japanese gov- 
ernment contract to develop a 
commercial ceramic gas tur- 
bine with •mwitHdft fuel capabil- 
ity. • ;.f . 

Marine engines up toS^OOhp 
will be imported, to compete to 
the Shine river-boat ami fish- 
ing-boat markets, and ulti- 
mately -for generator^et appli- 
cations. 


\ 


Michael Smith 

PRS ConsuUanqj Group 


CUMMINS 


Wall Street’s 


patience tried 


THE DOWNTURN to the US 
truck market has come at a 
horrible time for Cummins 
Engine, the big US indepen- 
dent diesel-maker. 

After several years of slog- 
ging out a long-term and costly 
policy to keep the Japanese out 
of both the US loose-engine 
and truck market, the com- 
pany was rewarded with & net 
loss in the third -quarter this 
year of $99- 7m. 

to May, Mr Henry Schacht, 
the widely-respected chairman 


Brier-ley's Industrial Equity 
has a potentially hostile 15 per 
cent stake. 


Arguments rage about 
why Cummins has 
failed to get Into the 
btack.and stay there 


Over the -past six years, 
Cummins has spent $8$0m on 
the .development of new 
engines. Its manufacturing 
workforce has been cut by a 
third and its manufacturing 
floorapace fay a quarter. Unit 
volume production of engines 
has tripled, resulting to a jump 
in productivity per man of 50 
per cent The cost of making 
engines has falien 20 per cent 


and chief executive raid tt was 
-time the company started to 


make profits and share the 
rain with s h areholde r s of its 
long-te rm investment pro- 
gramme^ 

The proviso, said- Mr 
Schacht, was that tire US econ- 
omy did not become 
“unglued”. With the fall in- the. 
North American, truck m»rkat, 
for which Cummins supplies, 
more than a half the engines, ■ 
some of the “unglueing” has 

already happened. 

Arguments rage about the 
mix of reasons why Cummins 
has failed so far to get into the 
black and stay there. One rea- 
son is that .it has made very 
heavy weather of modernising 
its production plants. Its Inven- 
tory levels of HO days’ worth of 
stock last year was little 
changed from 1983, for exam- 
ple. it has probably narrowed 
the yawning gap to efficiency 
between its shopfloars and Jap- 
anese engine-makers, but it 
has not closed it 

A second reason is its costly - 
research and development pro- 
gramme - $180mayear - and 
the high cost of retooling facto- 
ries and moving more than 60 
production lines. 

A third reason is the fallout 
from its own price-reduction 
policy, which it decided to ease 
only in 1987. Three years 
before that, it had cut the sale 
prices of its engines hr up to 40 
per cent In order to defend its 
market share against threat' 
ened Japanese inroads. The 
consequence for its profits- was 
immediate and long-lasting. 

Cummins has been spectacu- 
larly successful in keeping the 
Japanese out, but the cost pen- 
alties have been huge. Wall 
Street appears to be tiring of 
the story, and. now Sir Ron 


This gruelling ride has pro- 
duced the following perfor- 
mance balance sheet On the 
upside, sales have doubled to 
$&ftm oyer six years. Market 
shares to , traditional markets 
have been defended and the 
Japanese threat kept at bay. 


The downside is. a loss, last 
year, of $63m following a weak 
profit of of £l4m the previous 
year. The debt ration has 
climbed from 28 per cent to 
more than 43 per cent,' which 
rises to over 50 per cent when 
off-balance sheet items are 
included. - 


Mr Schacht remains ada- 
mant that the policies Cum- 
mins has followed were the 
right ones, though he concedes 
that it could have done, things 
better with its factory moderni- 
sation. ... 


He points to the weak mar- 
ket position now of many US 
industries ami manufacturers 
who backed off' from the com- 
petitive challenge jpoeed by the 
Japanese - a point that is 
undoubtedly true. He says that 
if Cummins simply Muck 
to its older, bigger engines, and 
had not spent a lot of money 
getting into the market for. 
smaller engines, its manage- 
ment would now be presiding 
over an organisation In termi- 
nal de cline. That also fa true. 


The problem to that Cum- 
mins has not mad© money in a 
strong US nuuket. and now the 
market is weakening Japanese 
track- ami engaiMMkws have 
not gone away, -and may be 
more in t erest ed far the US once 
their own surging domestic 
market has rooted off And the 
patience of WalTStreet seems 
to be weartog thltt,- . 


Nick Garnett 


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• ‘ : .'OCT- 


The world's 

H^Jop advertising agencies 
; are entering a much 
more complex and 

competitive era. The 

days of agencies as stock market 
stars are over. As Alice Rawsthom 
reports, the ,1990s- will be a decade 
of new challenges for the 
international advertising industry 


“Advertising in ' its new 
dimension irmddes everything. 
TX realises, or materialises, m 
all its obscenity; it monopolises 
public tife in its exhibition. It fs 
' our only architecture today.” 
Jean Bdudrillard “The 
Ecstasy of Commamcatkm\ 
ADVERTISING has invaded 
everything In the'lfleosMt has 
been an era when advertising 
won its way on to stock mar- 
kets, into business schools and 
even on- to the intellectual 
%enda thanks to- iasMbnable 
theorists like Jean BandriOard. 

As the decade comes to a 
rinse the mtematinnal adver- 
tising industry is entering a 
much more competitive era. 
Advertisizig expenditure is still 
rising at a rapid rate but there 
are signs of a slowdown in the 

US and fiie UK. 

-The glTSbn (£H3bn)hidU8try «. 
iff still experiencing: buoyant 
growth elsewhere. Yet many 
European markets are still 
immature and the western 
agencies have, -so far, bad Ettie 
success in Japan, by far tbe 
digest market in Asia. 

At the same time the growth 
. of other marketing disciplines 
- direct mail and sales promo- 
tion - in the US and the DK is 
challenging the role of the tra- 
ditional a gftney - 

. .. The days of agencies as 


stock market stars are over. 
Saatchi & Rawfe-hi, once a sym- 
bol of the UK industry’s suc- 
cess, is plagued by problems 
and preyed upon by predators. 

One hwiinaftnn of the indus- 
try’s difficulties is th«* the 
Wall Street analysts who have 
followed its fortunes through 
the 1380s, are switching to 
other sectors. One has turned 
to gold mining, another to 
retailing a third to fizzy 
drinks. 

“In a few years the market- 
ing sector wQl no longer exist,” 
said Mr Greg Ostroff, advertis- 
ing analyst with Goldman 
Sachs in New York: “After all 
there is really no reason why 
agencies should be public com- 
panies.” 

The leitmotif of the advertis- 
ing industry's development in 
~the 1300s .was the creation of 
international networks. At the 
start of the decade global 
advertising was dominated by 
the giant US agencies. But in 
■ the mid-1980s the UK agencies 
made .the most of the strong 
pound, the soaring slock mar- 
ket and the UK’s liberal 
accountancy regulations to 
buy their way into interna- 
tional advertising. 

Four of the world’s top 10 
age ncies are now owned in the 
I7K. Saatehl fras its eponymous 


MntriBL 






yUMWJM 

ivmn/JKi 



jj mi 



INTERNATIONAL 

Advertising 


networ k and Backer Spielvogel 
Bates. WPP, which began the 
decade as a supermarket bas- 
ket manufacturer, now owns J. 
Walter Thompson and Ogilvy 
& Mather. 

But the days when UK agen- 
cies could count on the stock 
market for s u pp ort are over. 
WPP’s 5865m bid for Ogilvy 
this raring was probably the 
last of the ambitious UK acqui- 


sitions. The weak pound and 
the sluggish state of the stock 
market has made it more diffi- 
cult to finance overseas deals. 

The tide has now turned and 
the UK agencies have become 
takeover targets. Boase Mas- 
simi pollitt fended off a hostile 
bid from Boulet Dru Dupuy 
Petit of France this summer by 
falling into the friendly hands 
of Omnicom of the US. WGRS 


has ceded control of its adver- 
tising activities to Eurocom, 
another French group, to con- 
centrate on media buying. 

One of the most interesting 
aspects of the industry in the 
1990s might be Japan's emer^ 
gence on the international 
scene. Dentsu, already the 
world’s largest agency thanks 
to its dominance of the Japa- 
nese market, recently 


announced its intention to 
establish an international pres- 
ence by acquisition. If it suc- 
ceeds. other Japanese agencies, 
such as Hakuhodo and Asatsu, 
may Follow. 

In the meantime the new 
international net w ork s of the 
1980s are concentrating on con- 
solidation. Even Mr Martin 
Sorrell, chief ex ecutiv e of the 
very acquisitive WPP. sees the 


early I990s as a time to “make 
sure the businesses we already 
own are running really well.” 

Ostensibly the new networks 
have entered a buoyant mar- 
ket International advertising 
expenditure has grown by over 
10 per cent a year since the 
mid-1980s. Mr Sorrell expects 
continued growth of 10 per 
cent into the 1990s. But the 

agencies are threatened by a 
slowdown in the US and UK. 

The rate of growth in the 
$76bn US market peaked in 
1984 and has been sluggish 
ever since. Tbe burden of bor- 
rowings left by the leveraged 
bids of the 1980s has forced 
some companies to cut costs. 
Tbe pressure on corporate prof- 
its has prompted others to 
switch budgets to short term 
tactics, like sales promotion. 

Mr Philip Gcier. president of 
Interpublic, the giant US group 
which owns McCann-Erickson 
and Lin tax. is convinced adver- 
tising win revive: “There are 
already signs that the trend 
towards sales promotion is 
slowing," he said. But in the 
short term the US agencies 
face the prospect of a sluggish 
economy next year. 

The same scenario is now 
being replicated in the $l2bn 
UK market. Hie impact of high 
interest rates on corporate 
profits and consumer spending 
has prompted many companies 
to cut budgets. 

“At tbe moment the Industry 
is talking itself into a reces- 
sion," said Mr Jeremy S inclair 
deputy chairman of Saatchi. 
“The market has not fallen, it 
has simply slowed down. But 
that means we have to be very 
careftil about costs." 

The effect of a slowdown in 
advertising - a hi g hl y lever- 
aged industry with high fixed 
costs - tends to be more 
severe than in other sectors. 
Many UK agencies are already 
under pressure. Some have 
resorted to redundancies. 

The outlook in other coun- 
tries is more optimistic. Else- 
where in Europe, expenditure 
Is still rising rapidly. In some 
countries, such as Spain and 
Portugal, this is a reflection of 
economic growth, bn others, 
like West Germany, it has been 
fuelled by the creation of new 
advertising opportunities 
through TV deregulation. 

Even eastern Europe is open- 
ing up. A number of western 
agencies have opened offices in 
Hungary and the Soviet Union. 
The eastern European market 


is already worth Slbn a year 
and could be worth as much as 
$l0bn by the mid-1990s. 

Asia is probably tbe fastest 
growing market of all. But 
Japan, which accounts for 75 
per cent of the S37bu Asian 
market, is still dominated by 
Dentsu. Western agencies have 
intensified their efforts to 
break Into Japan, but the idio- 
syncracles of the advertising 
system and Dentsu's domi- 
nance of the media, means 
they have made little progress. 

If internationalism domi- 
nated the industry's develop- 
ment in the 1980s, the leitmotif 
for the 1990s seems set to be its 
diversification into different 
disciplines. 

Many of the larger agencies 
have already moved into other 
areas of marketing such as 
sales promotion uud public 

relations. So far they have 
tended to deliver these disci- 
plines separately through inde- 
pendent subsidiaries. One of 
the challenges for the 1990s 
will be to combine all these 
disciplines - os the Japanese 
agencies do - into an inte- 
grated service. 

Some agencies have already 
made progress. Ogilvy has 
developed n system of "orches- 
tration" whereby clients work 
with one account director who 
services their account across 
different disciplines. 

But integration is fraught 
with problems. Many leading 
companies have not structured 
their marketing departments 
to work across different 
national markets, let alone 
across different disciplines. 

“Different clients have very 
different needs,” said Mr Alex 
Kroll, chairman of Young & 
Rublcam, the US marketing 
group: “in future we will have 
to be much more flexible.” 

The need for flexibility will 
be exacerbated by the trend 
away from mass marketing, 
the agen cies * traditional area 
of expertise. This is most 
marked in the US where the 
fragmentation of consumer 
markets and decline of the 
mass media has prompted big 
advertisers, like Proctor & 
Gamble, to restructure to 
accommodate niche marketing. 

All this paints a picture of 
advertising as an increasingly 
complex and competitive 
industry. The 1990s seems set 
to be a decade when the tradi- 
tional tenets of the advertising 
industry will be challenged 
again and. s gam. 


ssarksrj 

i? !hc 

2crj;ner- 

t’sprejd 

iWcifcL- 

cf 

■-’ .mi 
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of 

*• £* » »Iy 
roar 



A few household names we’ve helped make bestsellers 

Marmite. Lucozade, Horiicks and Bovril: around the world. clients than any other agency in the world. 


•Marmite, Lucozade, Horiicks and Bovril; CU. VJ M- JL-iAA 1 
allproduced by one company: SmithKline Beecham. All well-known 
•\ in dozens of countries around the world. (So well-known, in fact, that 
. SmithKline Beecham won Campaign magazine’s C UK Advertiser of 
• : the'Year ? award this year.) 

/ And all -of- them advertised by one agency: Ogilvy and Mather- 
Uoivli H & ^ as we’re known in the Far East. 

What’s not so well-known is that O&M has more international 


1C VYUllUt clients than any other agency in the world. 

Iii fact we handle 49 different companies in five or more countries 
worldwide. 

We’re also among the leaders in P.R. and Sales Promotion, as well as 
having the world’s number one Direct Marketing network. 

So whether you’re selling chillies to Chile, brussels to Brussels, or 

anything you like to Lahore, call OtjilvV ^fMathCF 

n . I>r - . Al no/? rw /-✓■* 


Peter Warren on 01-836 2466. 


rnaca,ldBdM W&trcZ.'MqJmiio: U-A3fi ]«& 









I 

* 


FINANCIAL TIMES THURSDAy.DECEMBER 


7 1989 


INTERNATIONAL ADVERTISING 2 


The Advertising World 



|U 'l "vi'.i.. 





paaqm fl 

sillls 


Gross income (1988): $1.3bn 

mnfap (iwv pi4hn 

Headquarters: New York. 

Attar years of lining in the 
shadow of the dynamic UK 
marketing groups, such as 
Saatchi and WPP, the giant 
US groups, like the powerful 
Interpublic network, have 
returned to the ascendant. 
Interpublic has been slowly, 
but surely expanding Its two 
advertising networks - 
McCann-Erickson and Lintas 
- over the past year or so. 

It also increased Its minority 
holding in the Lowe Group 
of the UK when Lowe took 
full control of Mnwriaifc in 
the US. Interpublic is now 
concentrating cm augmenting 
its activities outside 
traditional advertising. This 
summer it entered the fray . 
for Saatchi by offering to buy 
one of its smaller subsidiaries. 


rHrrTTwm^M 


^TTtv!& m, "T 


Patrick Harverson on the global economic background 


UNITED STATES 


The threat of overheating Recession begins to bite 


THE WORLD economy has had 
a good year. Yet, the engine of 
global economic growth has 
been showing signs of over- 
heating, and attempts to coed 
the pace of expansion are 
threatening to throw some 
economies sharply into 
reverse, thereby creating an 
uncertain climate for the inter- 
national advertising Industry- 

Overall, the picture of world 
economic prospects remains 
relatively bright, clouded only 
by concern that the stubborn 
strength of the dollar, rising 
inflation, and turbulence in 
financial markets, could lead 
the global economy into reces- 
sion. So for these fears have 
proven unfounded. A tighten- 
ing of monetary policy world- 
wide, aided by an easing of 
world commodity prices, 
appears to have halted infla- 
tion, but not at the expense of 
growth. 

The current consensus 
among economic forecasters is 
that the world’s industrialised 
economies will grow at an 
average 3.5 per cent next year. 
Although this would represent 
a significant slowdown from 
the 4J per cent achieved in 
1 988, and the respectable 3.3 
per cent expected this year, it 
would remain a respectable 
rate of growth. 

However, the figures and 
forecasts hide marked differ- 
ences in performance and pros- 
pects which mean that the rate 
of advertising growth now 
varies greatly from country to 
country. In simple terms, 


US and UK economies are 
slowing as their respective gov- 
ernments apply the monetary 
brakes in an attempt to ease 
inflationary pressures and 
knock chunks off large trade 
deficits. Of the two, the UK 
economy is in worse shape and 
is already teetering cm the edge 
of recession. 

The Japanese and West Ger- 
man econ o mies are heading for 
better times, and should enjoy 
growth well above the average. 
However, the spectre of infla- 

The darkest cloud on 
the advertising 
industry's horizon is 
the slowdown in the 
US economy 

tion still hangs over all the 
industrialised economies, and 
the efficiency with which gov- 
ernments tackle it will deter- 
mine which ec o nomie s strug- 
gle and which break free from 
t|w shackles of rising' urices. 

The darkest cloud on the 
advertising industry’s horizon 
is the slowdown in the US 
economy. The US advertising 
agencies have suffered slug- 
gish growth since the mid- 
1980s. The threat of an eco- 
nomic slump in the world’s 
largest advertising market 
augurs ill for an industry 
already weakened by several 
years of poor performance. 

During the summer the 
threat of an economic stomp 


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was being taken seriously in 
the US. Since then the tighten- 
ing of monetary policy has 
helped stow the pace of eco - 
nomic activity without setting 
off recession alarm bells. 

Forecasters are now predict- 
ing that US gross national 
product (GNP) will grow about 
1.75 per cent next year, com- 
pared with an estimated 23 per 
cent this year. 

What do these forecasts of 
economic activity mean for the 
advertising Industry? The key 
lies in tow corporate profitabil- 
ity, consumer spending habits, 
business confidence and share 
prices react to the slowdown in 
economic growth. 

In the US, there are already 
signs that corporate earnings 
have suffered. Weak cash 
flows, steep borrowing costs 
and falling consumer demand 
have eaten into company reve- 
nues and squeezed profit mar- 
gins. 

Confidence among the busi- 
ness sector has also taken a 
knock. Recent surveys have 
shown that US business man- 
agers are increasingly pessi- 
mistic about the outlook for 
sales and growth. The volatil- 
ity of financial markets has not 
toteed. and the fall in p armrwm 
and confidence has obvious 
Implications for the advertis- 
ing business. 

The recent strength of the 
dollar has created problems of 
its own. Exporters struggle as 
their goads became mare 
expensive, and imports con- 
tinue to flood in. Subsequently, 
there has been little correction 
in the huge trade deficit. 

A further worry is the weak- 
ening in domestic demand. 
Like Britain, the rising cost of 
credit in the US has ted to a 
fall in consumer spending. 
Durable goods and cars have 
been particularly hard hit. 
Even more worrying, some 
economists have been suggest- 
ing that the drop in demand 
mnlri rignai the mid of what 
lias been an eight year cycle of 
buoyant consumer expendi- 
ture. 

On the positive side, the 
strength of the dollar has been 
a reflection of international 
investor confidence in the US 
economy and in Hr Alan 
Greenspan, the chairman of 
tiie Federal Reserve, and his 
deft handling of monetary pol- 
icy. 

The Fed initially raised 
intoest rates to cool down an 
overheating and inflation- 
threatened economy, and it has 
since eased monetary policy to 
prevent the economy from 
grinding to an unnecessary 
halt. This pragmatic approach 
to policy has won praise, and 
further easing, including a low- 
ering of interest rates, can be 
expected. 

In the UK, the outlook is 
bleaker. The UK agencies, 
which have been struggling 
against a slowdown in adver- 


tising expenditure since the 
spring, are now bracing them- 
selves for a difficult year in 
1990. 

The problems in the UK 
economy have been similar to 
those in the US. Excessive con- 
sumer demand, <w«i, initially at 
least in the UK, a strong cur- 
rency, combined to create a 
deteriorating trade balance and 
stubborn Inflation. The differ- 
ence has been in the effective- 
ness of policy. While tike Fed’s 
touch on the monetary brakes 
has been light, the Treasury’s 
handling of the economy has 
proved less assured. 

The result has been a sharp 
drop in consumer demand, a 
sudden slump in the housing 
market, the first signs of a 
squeeze on company profits, 
and little indication yet of a 
meaningful rev e rsal of infla- 
tionary trends. 

Although this year h as been 
dominated by attempts to rein 
in consumer demand and 
indebtedness, one of the big- 
gest hurdles faring the econ- 
omy next year will be the large 
deficit in the corpo ra te sector. 

British companies have bor- 
rowed a great deal for expan- 
sion In recent years. To reduce 
the burden of current high bor- 
rowing costs and move out of 
deficit companies will have to 
cut investment plans, stocks 
and employment Spending on 
advertising could also become 
a victim of the belt-tightening. 

There is little sign yet that 
the Treasury will, like the Fed, 
ease monetary policy. Indeed 
interest rates are likely to stay 
high throughout 1990 so long 
as infaUftfi remains at its cur- 
rent level. 

In Japan and West Germany, 
the p co n nmte picture is much 
brighter. GNP growth in Japan 
this year ins been up to its 
usual high level and Is forecast 
to reach 5 per emit or more by 
the end of the year. 

Next year there will only be 
a marginal contraction in eco- 
nomic activity. C onsu mer 
spending will remain a Long on 
the back of rising incomes. 
I n ves tm e n t has been and will 
continue to be buoyant- Export 
grow th , aided , by the weakness 
of the yen against the dollar, 
will remain healthy In 1990. On 
economic grounds alone, Japan 
is likely to offer the best oppor- 
tunities for growth to the 
advertising industry. 

West Germany should lead 
most of Continental Europe 
through another good year in 
199a Rising consumer expendi- 
ture should replace slowing 
investment demand as the 
main locomotive of growth in 
the leading industries, so long 
as inflation does not raise its 
ugly head. Again tight mone- 
tary policy will be relied upon 
to restrain price rises and to 
sustain a favourable climate 
for the West German advertis- 
ing agencies. 


“I HAVE a system,” muttered 
Mr Bob Coen. “Everything Is 
put in a pile. The only question 
is which pile?” There are piles 
of paper everywhere in his 
office. Kies on the desk. Piles 
on the sofa. Piles am the floor. 

For more than four decades 
Mr Coen, as chief economist of 
McCann-Erickson, one of the 
two agencies in the vast Inter- 
public network, has pored over 
the piles of paper in his office 
to forecast the fortunes of the 
US advertising industry. And 
in recent years his forecasts 
have been for from optimistic. 

The US advertising industry 
is in the doldrums. Advertising 
expenditure raced ahead in the 
early 1980 b, fuelled by healthy 
corporate profits, the introduc- 
tion of new products like per- 
sonal computers and the 
impact of deregulation an seo- 
tors such as airlines and trie- 

CQ flUHQfllCflPQ OS, 

The rate of advertising 
growth reached a peak In 1984, 
but the industry's fortunes 
have faltered ever since. From 
1985 onwards, the increases in 
expenditure have been 
restricted to single digits. Mr 
Coen expects the US market to 
grow by just 6.4 per cent to 
$!25bn (£80bn) this year, wril 
below the increase in US gro ss 
national product 

The impact on the domestic 
industry has been dramatic. 
Advertising executives, who 
were once notorious for their 
long lunches and e xtra v a gant 
expenses, have entered a new 
era of austerity. Profits have 
come under intense pressure. 
Agencies have been farced to 
cut costs and shed staff 

One by one the bastions of 
US advertising have fallen into 
the clutches of overseas preda- 
tors as the ambitious UK agen- 
cies have exploited the weak- 
ness of their American 
counterparts. Ted Bates has 
been bought by Saatchi & 
Saatchi. J Walter Thompson 
and Ogflvy & Math er are now 
owned by the WPP Group. 

Even Madison Avenue is no ' 
longer the same. The new ch- 
mate of cost cutting has 
prompted many agencies to 

move away from the tradi- 
tional centre of American 



The American 
industry is in 
the doldrums, writes 
Alice Rawsthom 
a short-term response to 

chang es in the economic and 
corporate climate. Or whether 
it represents a longer term 
change in the attitude of North 
American companies to mar- 
keting as a management disci- 
pline. 

In spite of this picture of 
gloom and doom, the US adver- 
tising industry is stffl the larg- 
est, and probably the most 
powerful in the world. Almost 
half of the $178bn invested in 


economies advertising has 
been one of the first areas to be 
cut Traditional brands have 
been streamlined and new 
product development has 
slowed down. This cost cutting 
has been combined with a 
trend towards using afferent 
marketing techniques — such 
as sales promotion and price 
cutting - to achieve short 
term increases in sales. 

The trend away from tradi- 
tional advertising towards 
other disciplines has been 
accelerated by the combination 
of a rapid rise in media infla- 
tion and the decline of network 
TV audiences, which means 
that mnsft marke t putia cam- 
paigns are not only more 
expensive, but tend to be less 


One by one the bastions of US advertising 
have fallen into the dutches of overseas 
predators, notably the ambitious British 


advertising world-wide last 
year was spent in the US. 
There are more than 2,500 
agencies across the country, 
employing more than 60,000 
people. 

One of the chief contributors 
to the slowdown in growth has 
been the wave of mergers and 
acquisitions that has swept 
across the US industrial land- 
scape. Many fearffafr US adver- 
tisers have fallen victim to 
leveraged buy-outs or takeover 
bids. 

The direct result of all this 
corporate activity has been to 
encourage companies to 
restructure and to cut costs. 




etas. 

The agencies also opera te in 
an increasingly complex 
marketplace. Consume - totes 
have become more diffuse and 
sophisticated in the 1980s 
creating a need for “niche”, 
rather than mass marketing. 
This problem has been exacer- 
bated by the fragmentation of 
the traditional mass media. 
The growth of cable TV, for 
ex ample, has eroded the power 
of the networks. As a result it 
has become more difficult - 
and often more expensive — 
for agendas to plan and imple- 
ment campaigns. 

One solution for the larger. 


Procter & Gamble, one of the 
largest and most influential US 
advertisers, acts aaa neat illus- 
tration. R spent an estimated 
£829m on media last year, com- 
pared with £923m in the peak 
year of 1985. 

“The inescapable conclusion 
is that dollars which were once 
spent on media advertising are 
now bring put into sales pro- 
motion aryf direct marketing,” 
said Mr John O'Toole, presi- 
dent of the Association of 
American Advertising Agere 


in media' advertising into -the 
other faster growing - and 
often mare profitable mar- 
keting disciplines. 

Some agradea are restruct- 
uring their operations to offer 
a more cohesive marketing ser? 
vice. Two yean ago Foote Gone 
& Belding introduced a new 
business, the Integrated Core 
m unications Group, in New. 
York which operates as a gen- 
eral .marketing consultancy by 
planning and implementing 
coherent programmes of adver- 
tising, direct marketing and 
Salas promotion. 

“We thought there would be 
a growing number of compa- 
nies which wanted to find one 
resource to provide all the dif- 
ferent disciplines," said MrJon 
Adams, president of IOG. “And. 
we thought they would want 
their advertisings direct mar- 
keting and sales prombtfon to 
be strategised and executed 
together." 

KG has doubled in size sfaoe. 
its inception and tow has bfl- 

^ghow^a^egrate tSedtfifev 
ent disciplines at its other 
main agendas in Chicago, Los 
Angeles and San Francisco. 
Several other agendas 
including O&M, Y&R and Leo 
Burnett - arealsodevefoptifg 
ways. of offering an integrated 
service alongside their' tradt- 
tkmal advertising activities. . 

There are some pockets =a 


growth within US advertising.. 
But expansion tends to he core - 
centrated in emerging eco- . 
aom ric centres,, such as Sesttie 
and Minrireiprti*« - not ’in the 
traditional' 'centres ’of 
York and Chicago. 

One encouraging omen for 

the industry is that the of 

corporate activity has stowed 
down. Many, big companies - 
still bear heavy drills as , the 
legacy of their leveraged tied*# 
Although. Mr Jim Patterson, 
chief executive officer cfj Wal- 
ter Thompson, is. convinced 
that advertisers tow. reelite 
that they can not afford toed* 
tinue to channel expbpmtifflt.- 
Into short-term promotions^ 
tactics, to the detriment, of 
long-term, brand building . 
through adver tising . ' ” v 
Yet . the immediate oofiptifc 




hattan. Saatchi has gone down- 
town on the banks of the Hud- 
son. Ogflvy is moving to the 
west side. 

“When the recession first 
began a tot of agencies simply 
did not know what was hap- 
pening,” Said Ms Rmrna Hill, 
advertising analyst at Werth- 
eim Schroder in New York. “At 
first they thought it was a 
short term slowdown. It took a 
long time for reality to set in.” 

'Hie critical question for the 
US agencies is how long the 
Blowdown in growth will con- 
tinue? Ova- the next few years 
it will become clear whether it 


and buy-outs. The indirect 
result has been to prompt 
other companies to trim over- 
heads in order to improve prof- 
itability thereby fendin g off 
potential predators. 

Yf hp n th e giant PS industrial 
groups have looked around for 


stem. Interpublic, which owns 
McCann and Lintas, and 
Young & Rubicam now wmire 
most of their money outside 
the US. 

Another solution has been 
for agencies to diversify 
beyond their traditional base 


us agencies fay faflOngs in 1989 


1 Young & Rubicam 

2 5 BOO 

3 Saatchi A SaatcM 

4 Backer Spieivogel Bates 

5 DOS Needham 


$2, 792m 
$2,414 m 

51.964m 
$1 ,929m 

Soure* AdwUaiog ao. 


to slow down: naxt. ysfr 
thereby fab “ ' ' 
sure on ndmi. 
tore. Mr Coen is 
eventually, corporate 
wiu recover .and new 
development will begin : «**“»**, 
He expects cflvcrtfsfag Wpaor 
dlture .to outstrip gr0s» 
national, product by 1998, •?=- 
In the meantime tfcft. 
advertising agencies are fa for 
a tough time. “Gee.Mw qhte 
Bed, “weiiave become the sOri 
of industry that takes two 
hours for lunch and drinks i£» 
rather than seven a 

ll-ltr ■ 


J 


t 

A 












I. 


t 




axing 


INTERNATIONAL ADVERTISING 3 


% 


r °ups 


£S> 

:ss§ 


r -*^Bst®R 

35 ? 

sLsst «JBkto 

v-'ltkfg 

i Sjir ^H r 
^IJiaE'bjg 

s: .i-.-ft2tea< 


bite 



“ A COMMON criticism trfglobal 
if.l? a dvertisin g is that - In 

seeking to appeal to so many 
different people in different 
countries - tt almost always 
ends up being bland. 

The latest c am pai gn from 
Benetton, the Kalian fashion 
gro up , is anything but bland. 
Benetton unveiled Its new ads 

this anfnnm to huWls Of 

protest from ev e ry one Boat 
US civil rights groups, to 
right-wing extremists In 
France. 

The same of all this outrage 

fa tbe Tntpc* twrfaliHHit «if the 

“United Colours off Benetton" 
campaign which featured a 
Mack woman breffit feeding 
a white baby and another <rf 
a black and a white hand 
locked together in hand-caffs. 

The campaign has won 
awards tn France; been 
attacked in the US; and 
banned from the Underground 
in London. And Benetton has 
fired Edorado, the French 
iigw i ey fartHwd It alL 


JAPAN 


Foreign targets beckon 


TO THE unenlightened " 


ing is my s t ifyi ng. The subway 
statkos of Tokyo are plastered 
with- posters of-busmessmext 
with boulders fairing qq their 
heads or tethered to their 
chairs- The television sc* r**ra« 
blare' oat commercials 
crammed with abstract* imag- 
ery- ■ - _ 

Mystifying though its output 
may be, the Japanese advertis- 
ing industry is booming. 
Japan’s Y4,417bn (£20bn) 
advertising market is the. sec- 
ond largest in the world, after 
the US. So far the idtosyncra- 
ries of the advertising sys te m 
have ensured that theJapa- 
nese agencies have continued 
to dominate ft. 

Yet competition from west- 
ern agencies is now intensify- 
ing and the Japanese agencies 
are becoming more ambitious 
about ■expanding overseas. The 
agencies now face the chair 
tenge of coming to -terms with 

the infanurfiiin»1iMrtto ] of Sw 

advertising industry. 

Advertising gained momen- 
tum in Japan in the 1970s 
thariks to the g ro wt h of the 
economy and the trend 
towards westernisation. Bat 
the industry suffered a slow- 
down after the oft price rises of 
the late 1370s and eariy ZSSOs 
when corporations tarried their 
attention to exports. 

Since the mid-1960s the poHt- 
ical scjnabblea. over Japan’s 
trade surplus has encouraged " 
corporations to concentrate, on 
the domestic market. The polit- 
ical programme of deregulation 
has also created a new genera- 
tion of advertisers, such, as 
financial service companies. At 
the same time the canddnatUm 
of a strong currency and the 
apparently insatiable Japanese 
appetite for luxury Imported 
goods, has enticed foreign com- 
panies into Japan- - V ■ 

Advertising expenifltare has 





The Japanese industry 

is vast and full of 

idiosyncracies, reports 

Alice Rawsthom 

soared, ft rose fay 6 per cant to 
Y3£45bn in 1987 and by 12 per 
cent to Y4,417bn in 1988. 
Advertising now accounts far 
12 per cent erf Japan’s gross 
national product, compared 
with 1 per cent in the early 
1988s. 

The advertising industry has 
.expanded dramatically. Thera 
are now 4,000 agencies in 
Japan, according to the Japa- 
nese Advertising Agencies 
Association, 3JS00 five 

years ago. The number of peo- 

ple employed in Hw biitnu Oy 

increased by a sixth to 84,500 
last year alone. 

sv JBot the balance of power in 
Japanese advertisings, has 
stewed the same. Dentsu. the 
world’s largest advertising 
agency, still dominates the 
market with gross income of 


1. Dentsu 
2., Hakuhodo 

3. DaHchl KDoku 

4. Dalto 
BL Tofcyu 


Y1 ,223m, or 24 per cent of all 
expenditure. Hakuhodo, its 
dosest competitor, has 10 per 

cent with inrtv( pm of 

Dentsu and Hakuhodo have 
managed to maintain Hifi r 
powerful positions, not only 
against increased domestic 
competition, but also against 
Hw influx of western agencies 

firm ing mtn Japan 

The secret of their success 
lies in the structure of the Jap- 
anese media baying system. 
The sheer «w»te c£ their matia 
spending power Is an obvious 
advantage in securing the best 
space in newspapers and maga- 
zines. Dentsu alone accounts 

for a fifth of all Japanese news- 
paper advertising. 

They exert even greater 
influence in the television 
industry. The YL316bn Japa- 
nese TV market is divided 
between “spot" commercials - 
which, in theory at least, are 

hrm gtit on an Open raw ica* — 
and “ pr ogr a mme” advertising 
whereby agencies are involved 
in the production and sponsor- 
ship of programmes. 

Dentsu not only h«t share- 
holdings in several TV sta- 
tions, bat is involved with h«tf 
of all the primetime pro- 
grammes on Japan’s five 
national TV rfiamwiR- Baku- 
bodo is in vo lved with another 
fifth. The la r g e Japanese adver- 
tisers have little alternative 
but to deal with Dentsu or 
Haknhodo if tbey want decent .. 
exposure for their campaigns. 

The western agencies face 
the parallel problem of the 
kdosyncracies of the Japanese 

ml u Mtiwfwg l yJtfwi. - rhg J3p3- 

groow incoma In 1988 

$1 ,229m 

8622m 

S142m 

8140m 

8135m 


nese industry, like the adver- 
tising industry in most other 
countries, is modelled on the 
US system, bat there are signif- 
icant d HTt»n» «X? gg. 

-Topunaqo agencies, fix’ exam- 
ple, tend to offer a wide range 
of marketing services, such as 
sponsorship and sates promo- 
tion. as well as advertising: 
There Is also no concept of “ca- 
ent conflict” in Japan. Agen- 
cies can, and do, work with 
several 

Moreover the creative con- 
tent of Japanese advertising is 
often mystifying to we st erners. 
The Japanese favour a subtle 
approach, a soft sell, which 
could not be more different 
from the hard sell of the Amer- 
ican a g wnc to * 1 . 

Most western agencies have 
chosen to enter Jkpan through 
joint ventures. The Interpublic 
agencies, McCann-Erickson 
and Unhig have joined forces 
with Hakuhodo. Grey is with 

Tfarilrn npt^ Suntphi & Saatphl 

with Yomiko. 

Conversely the Japanese 
a ganripn hagp found it dHfinnlt 
to gypawd intn other countries. 
Even the mighty Dentsu 
derives just 10 per cent of its 
hilling * outside Baku- 

bodo is afin losing money on 
its small international net- 
work. 

There are signs erf the Japa- 
nese adopting a more ambi- 
tious approach to international 
expansion. Dentsu recently 
established an overseas man- 
agement team to orchestrate 
its overseas activities. Over the 
next few years it intends to 
aatohinh g significant interna- 
tional presence, probably by 
acquisition. 

H Dentsu is successful, other 
agencies may follow in its 
wake. The Japanese a g amies 
will then have to make the 
leap into the wider world of 
Int e rn ational advertising. 



market 

Li n rfcu 
rviMKT- 



UNITED KINGDOM 


...j’.b'-c 

. ■ r.y t' 


Little cause for seasonal cheer 


THE atmosphere at the 
advertising agency Christmas 
parties in Soho and Co vent 
Garden will be far from festive 
tfais year. The mood will, be 
subdued, reflecting the uncer- 
tainty currently pervading the 
UR- advertising industry. ... 

Few In the industry will 
admit to being seriously con- 
cerned. “It may be conven- 
tional' wisdom that, when the 
economy catches .a cold, the 
adverting industry gets pneu- 
monia, "said Mr .Mike Water- 
son, director of research at the 
Advertising Association. “But 
that Is not the case." 

- But the. fact is that, after a 
itomifa . ami a half of uninter- 
rupted growth, the advertising 
Industry faces the threat of 
recession: As consumer spend- 
ing has slowed down and the 
pressure on corporate .profits. 
haa increased, - advertising 
expenditure has been cut 
' The rumours of redundan- 
cies that have been flying 
j imn nrt the indnstry in recent 
nrartha ap pear to have become 
a reality. ft Saotchl is 

tim mght to hove made up to 80 
pvopk» redundant D’Arcy Mas- 
itis Benton & Bowles laid off 26 
staff last month- ' , 

Tbe most startling manifes- 
Urttonof the -industry's trou- 
bles istheway that tite glitter- 
ing -success, story of Sa atch i 
has turned soar. Once & sym- 
bol of Britain's strength 1 in 
world advertising, Saatch i, is 
now nunoured fo be a takeover 
target for foreign groups. 

At least some of the todufr 
try's docm.csB be attributed 
to the uncertainty at Saatchi 
Mf Brian Sturgess, an* analyst 
with BarclayB de Zoete Wedd, . 
said: “The UK agencies _haye 
■basked in Saatchi’s reflected 
glory for so long that its prob- 
lems are interpreted .as symp- 
tomatic of the business as a 
whole," r 

According tothe Advertising 
Association advertising expen- 
dlture grew ty 17 per cent in 
real terms to; £B8bn .last jw. 
The AA expects real growth of 



Agencies face an 

intensely gloomy 

outlook, writes 

Lisa O’Kelly 

4 per cart this , year - with 
expenditure of £7.fihn - and to 
1 per cent next year. Analysts 
are even gloomier. Mr Sturgess 
expects zero growth in real 
terms for 1990. 

The industry managed to 
escape the test recession of the 
early 1980s relatively 
im sea thed largely because it 
was able to ride on the back at 
the growth, of two lucrative 
new areas of advertising 
expenditure: financial services 
and technology. This time, 
thnng h, there is no such new 
blood. Instead, one of the big- 
gest advertising money-spin- 
ners of the decade, the Govern- 
ment privatisation programme, 
looks set to be cut in the face 
of fierce criticism of the water 
privatisation c am pai gn . 

Mr David Jones, managing 
director of Lowe Howard- 
Spink, said: “I see no reason to 
be optimistic for 1990. There is 
little growth from existing df- 


1. Saatchi & Saatchi 

2. J. Walter Thompson 

3. BSB Dorland 

4. Young & Rubtaam 

5. Oflilvy a Mather 


«»n«« and very little new busi- 
ness around to compensate. 
The only agencies that can go 
into 1990 expecting a good year 
are those that have won new 
business during 1389.” But in 

general agencies have won 
much less new business this 
year than in 1988. 

Inevitably all the uncer- 
tainty has hit the stock mar- 
ket Ms Sue Bailey, an analyst 
at Warburg Securities, said 
most advertising stock are cur- 
rently trading at a 80 per emit 
discount 

The jittery ‘atmosphere has 
been reflected in personnel 
shake-ups at most of the lead- 
ing groups, ft has also resulted 
in a crisis of creative confi- 
dence, with nervous clients 
demanding less adventurous 
creative strategies. Frustrated 
agencies, worried that their 
reputations may suffer, have 
been playing musical chairs 
with their creative directors. 

In the past, the larger groups 
could rely on overseas acquisi- 
tions to massage profits. Those 
days are over. The pound is too 
weak and share prices too tow 
for international deals to be 
viable. WPP's £555m acquisi- 
tion of Ogflvy & Mather in May 
looks fifcn the last of the big 
trans-Atlantic takeovers. 

The tide is now turning and 
UE w gtmrigg are finding them-- 
selves the prey of the Ameri- 
cans and Europeans. Earlier 
tbia year, Boase Massfmi Pol- 
litt staved off a hostile bid 
from Boulet Dm Dnpuy Petit 
of France only by falling into 
the friendlier dutches ofOnmi- 
com, the US group. Eurocom, 
another Frenc h con cern, has 
won control of WCRS*s adver- 
tising interests. Saatchi is 
being stalked by all manner of 

bROngs In 1988 


Somk Campaign 


overseas predators. 

Hard though it may be for 
the Soho creative directors to 
stomach, the one area of adver- 
tising to show promise this 
year has been media buying. 

Media has long been 
regarded as the poor relation of 
the advertising industry. But 
several factors have combined 
to make an ability to compete 
in media buying on a world 
scale a priority for the big 
agency groups, including the 
spiralling cost of airtime and 
the concentration of media 
ownership. 

Saatchi and WCRS have 
already emerged as powerful 
players in media buying: Those 
agencies that do not have foot- 
holds in media have been 
a ri umhUnp to find them. 

Similarly, the agencies that 
are unable to provide a wider 
range of marketing services 
may find themselves left 
behind. Sales p ro m otion, direct 
m a r ta ting and public relations 
are all taking a larger slice of 
marketing expenditure. 

The WPP Group, which is 
involved in almost every area 
af marketing as well as tradi- 
tional advertising, is more opti- 
mistic than most about the 
future. *r do not see any cause 
for panic," said Mr Martin Sor- 
rell, WPP’s chief executive. 

Mr Sorrell, like the rest of 
tile UK industry, finds consola- 
tion in the expectation that the 
present slowdown is likely to 
be short-lived. If Mr John 
Major, UK Chancellor of the 
Exchequer, succeeds in 
steering the economy back to 
growth in the approach to the 
next general election the ad 
market should recover towards 
the end of next year. 

Bat, if infla tion Increases 
again after the election, the 
industry will find itself in the 
grip of yet another downturn 
and the advertising agencies 
that are neither willing nor 
able to diversify may face the 
sad troth that advertising is no 
longer the fashionable market- 
ing tool it used to be. 






NO OTHER EUROPEAN NETWORK 
IS GROWING AS FAST AS AYER. 

Lost year Ayer's new business wins in Europe amounted to a bigger percentage 
increase than any of our competitors and an actual total billings figure" bettered 
only by Saatchi & Saatchi. If you’d like the explanation behind the results contact 
David Dodd at Ayer Europe, Metropolis House, 22 Percy Street, 
tendon W1P 9FP. Telephone 01-895 8890. Fax 01-895 8889. AjCl 

•So u rce: AdMitnlngAgej/i/89 





IV* 


FINANCIAL TIMES THURSDAY DECEMBER 7 1989 


( INTERNATIONAL ADVERTISING 4) 


SAATCHI & SAATCHI 


Sharp reversal in fortunes 


TO SAY that 1989 has cot been 
Saatchi & Saatchi's year, 
would be a considerable under- 
statement, Whatever its past 

role in breaking the domi- 
nance of the DS agency net- 
works, Saatchi's grand strat- 
egy has come sadly, and 
publicly, unstuck in the past 
12 months. 

Although the bubble started 
to burst following the Ted 
Bates deal in 1986, the turn- 
ing-point came officially in 
March at the company's 
jmnnai meeting, when Saatchi 
warned that there was likely 
to be a pre-tax profits fall in 
1388-89. It talked of substan- 
tially lower first half profits - 
in the event they were down 
from £20. 2m to £53.1 m - bnt 
emphasised that a much stron- 
ger second half was in view. 
While interest costs and the 
absence of exchange rate gains 
would drive the pre-tax figure 
down in the 12 month period, 
there were hopes that full year 
operating profits might be lit- 
tle changed. 

Looking at the causes of this 
reversal in fortunes, Saatchi 
itself was inclined to cite the 
economic and political uncer- 
tainties in the US, hitting the 
communications/advertising 
side, and a margin squeeze tn 
the consultancy arm. 

Since then, however, the 
angst has continued apace. 
The consultancy businesses - 
long- rumoured, and long-de- 
nied, to be a disposal possibil- 
ity - were officially signalled 
as being for sale in June. 
Apart from a few minor deals, 
however, no significant trans- 
action has yet been 
announced. Inevitably prompt- 
ing rumours that the prices 
being sought are proving elu- 
sive. Estimates of the possible 
proceeds have been scaled 
down by some analysts to less 
Mian £200m. 

Fairly inevitably, too, bid 
speculation has swirled 



Charles and Maurice Saatchi: traumatic 12 months 


around the group. Talk of both 
management buyout bids and 
external predatory moves has 
been fuelled by the building of 
a stake of more than io per 
cent by Southeastern Asset 
Management, a Tennes- 
see-based investment group 
which has made astute invest- 
ments in the agency sector 
before, and by the acquisition 
of a much smaller stake by 
Fininvest, the Milan-based 
holding company for Mr Silvio 
Berlusconi’s media interests. 

And, fighting back against 
the gloom. Saatchi has 
announced yet more manage- 
ment changes although this 
time they look arguably more 
significant Mr Robert Lotds- 
Dreyfus was brought In as 
chief executive in October, 
from Dun & Bradstreet; Mr 
Charles Scott, a colleague of 
Mr Louis-Dreyfus at D&B, 
became finance director. 
Meanwhile, the Saatchi 
brothers stepped down as Joint 
chief executives, although Mr 
Maurice Saatchi remains as 
chairman. 

This recent burst of bid 
speculation and management 
changes, however, has clouded 


what analysts view as the fun- 
damental problems of the 
group. Broadly, Saatchi 
appears to have been a salu- 
tary tale in the dangers of 
aggressive acquisition pro- 
grammes if subsequent man- 
agement is less than tight 

As a result, in purely finan- 
cial terms, a serious mismatch 
between revenues and costs 
has developed on the commu- 
nications side. This, according 
to Saatchi, has resulted partly 
from the difficulties in making 
internal projections In the 
wake of the merger of certain 
agencies in the US. 

Inevitably, steps taken to 
move the two back into bal- 
ance have darkened the 
short-term profits picture, as 
farther short-term expenses 
have Sowed. In the first halt; 
reorganisation and redun- 
dancy payments cost Saatchi 
almost £6m, with 500 jobs 
already lost. Costs of around 
double that figure were being 
predicted by analysts for the 
second half 

Critics have suggested that 
these problems were then 
exasperated by difficulties on 
the consulting side. Here, the 


earnout agreement on Hay 
Group - a significant part of 
the consul ting arm - has been 
blamed, rightly or wrongly, 
for distorting profit perfor- 
mance and, more crucially, 
investment trends. The sugges- 
tion ha s been made that, anx- 
ious to benefit fully from the 
earnout deal, profits may have 
maximised ahead of the end- 
ing of the payment period in 
late- 1937, and investment in 
training, technology and the 
like deferred. 

The ad spend deferrals in 
the current year, in the words 
of one analyst, “Upped things 
over the edge”. The size of 
these deferrals has never been 
estimated to be large - per- 
haps £25m against first half 
revenues In comm uni cations 
of well over £300m. However, 
with a cost-base already 
askew, the damage at the mar- 
gin heroines more critical. 

Where that leaves the group 
Is a moot point. When the sale 
of the consulting arm was first 
announced, the point was 
made that this might have left 
Saatchi broadly ungeared, able 
to concentrate energies on the 
communications businesses, 
and that if some fairly r adical 
cost-cutting was implemented, 
the company might, indeed, be 
well-pl aced to resume an 
upward path. 

As months have clocked by, 
the situation has clearly not 
become any rosier, and in 
spite of the recent introduc- 
tion of new talent, the extent 
to which Saatchi has got to 
grips with Its perceived man , 
agement problems remains a 
question mark in many 
observers’ minds. 

In short, while Saatchi may 
still point to Its previous and 
formidable record in creating 
the group, the task ahead in 
re-establishing it looks every 
bit as tough. 

Nikki Tail 


WPP 


Conundrum for the City 


T T COULD be an interesting 
comparison,” remarked . one 
leading analyst reviewing the 
two "heavyweights" of 
Britain's advertising industry 
shortly after plans by Saatchi 
& Saatchi to put its manage: 
meat consultancy arm up for 
sale were first officially 
announced. 

On the one side, ran the 
argument, would stand 
Saatchi, a potentially ungeared 
company (ex-consultancy) but 
heavily weighted to businesses 
in the slower -growing advertis- 
ing area, and with a perceived 
lack of management controls. 

On the other would come 
WPP. Mr Martin Sorrell's 
highly acquisitive group, went 
the thinkin g, would possess a 
better balance of interests, 
tighter financial checks, hut 
have yet to prove that its hefty 
acquisition programme had 
genuine "industrial”- rationale. 
It would also be handicapped 
by high debt levels- following 
its most recent burst of deal- 
making. 

In the event, the delays to 
the disposal of the Saatchi con- 
sulting Interests have made 
the remarks premature. But 
the WPP side of the equation 
remains something of a conun- 
drum for the City, as evidenced 
by the share price picture - 
which has done no more than 
oscillate rather wildly .between 
6Q0p and 750p - over the past 
year. While analysts are pre- 
dicting 1989 pre-tax profits of 
between £75m and £77m. and 
fairly impressive earnings 
growth well in excess of 20 per 
cent, the "glamour stock” 
image of the bull market has 
faded somewhat. 

- The company's origins - 
and meteoric rise over the past 
four and half years - have 
been well-documented. They 
remain, however, highly rele- 
vant to an assessment of the 
group today. In a nutshell, the 
story began in 198S with the 



t&tifi&uMi/rJUt Mi . 

WPP’s Martin SorroUL* heavily Indebted after many acquisitio n s 


arrival of Mr Martin Sorrell, an 
accountant by training and 
previously Saatchi’s finance 
director, as a substantial share- 
holder in Wire and Plastic 
Products, a tiny Kent-based 
manufacturing company. An 
extensive acquisition pro- 
gramme followed, much of It 
making use of deferred profit- 
related payment structures and 
principally targeted at small/ 
medium-sized companies in the 
marketing services field. 

The first quantum leap came 
tn mid-1987, with the acquisi- 
tion of the New York-based 
JWT Group for $S60m. What 
began as a hostile bid - the 
first in the sector - for a trou- 
bled but old-established adver- 
tising agency group, eventually 
ended in agreement 
That was thee followed by a 
second big step earlier this 
year when WPP added the 
Ogilvy & Mather network for 
$862m, this time in an agreed 
deal. In between these two 
acquisitions, the stream of 
smaller deals continued. Since 
Ogilvy, however, the pace has 
ground to a near-halt 
No one could doubt WPP's 
determination, in pursuing the 


- Ogilvy deal - although the 
idea of blending the fairly con- 
flict-free J. Walter Thompson 
And O&M networks was by no 

- mean s new- in the industry. 
WPP sounded out some institu- 
tional shareholder prior to the 
bid, itself and, by all accounts, 
received relatively little 
encouragement, at least, for a 
deal of that size so soon after 
JWT. -In the event, WPP 
ploughed ' ahead without 
recourse to its equity Inves- 
tors, arranging a £214m issue 
of convertible . preference 
shares and total loan facilities 
towing 9800m. 

But this background still 
leaves several question marks 
over the present and future. 
The first and most fundamen- 
tal is whether the acquisition 
programme has been justified 
and to what extent the result- 
ing band of interests can be 
sensibly melded together. The 
company’s case has always 
been that two Mg competing 
agencies form an ewmntfai ser- 
vice to clients. This is partly 
because of client conflicts 
which eventually arise with a 
single network, and partly 
because of the different cul- 


tures which need to he Dn 
offer. At the time of the Ogilvy 
takeover, the different regional 
strengths were also stressed, 
with O&M bolstering WPP's 
presence In the relatively fast- 
growing European market 

The second question mark Is 
exposure to advertising’ itself, 
where projected growth rates, 
although varying substantially 
between geographic regions, 
have been clouded by eco- 
nomic pressures generally-. 'Hie, 
result of embracing first JWT 
and then Ogilvy, means that 
just more than half WFP's rev- 
enues now come from this 
source. That would still cora- 
- pare -favourably with, say, 
Saatchi minus its consultancy 
. interests.' Nevertheless, the 
ttortg over. the. past couple of 
years have changed the charac- 
ter of WPP from an Investment 
perspective. 

To this, should be added the 
financial consi derati ons. The 
Ogilvy cteal' left'. WPP with net 
debt immediately after the 
transaction of around £360m. 
Gearing is a difficult subject, 
given the problem of goodwill 
write-offs and WPP’s conten- 
tious decision to take in “brand 
valuations" in respect of cer- 
tain subsidiaries’ names. And, 
on the plus side, it should be 
said that the Ogilvy acquisi- 
tion significantly diluted the 
importance of earnout deals 
within the context of the group 
as a whole. 

But debt levels, perhaps 
more than anything else, has 
tended to worry the London 
stock market recently, with 
analysts talking of interest 
.cover of a less-than-extensive 
three times. In the case of 
JWT. debt was paid down by 
the happy discovery of prop- 
erty transaction possibilities - 
in particular in Japan. The 
jury is still out on how Ogilvy 
Will unfold. 

NUdd Tail 


YOUNG & RUBICAM 


Enigma of Madison Avenue 


BACK IN 1925 an ambitious, 
young advertising agency left 
its offices in Philadelphia to 
move to the sixth floor of a big 
building at 285 Madison Ave- 
nue in New York. 

The agency was called 
Young & Rubicam and it had 
moved to Manhattan to handle 
an account for Jell-O, the jelly 
made by General Foods. Today 
Y&R is still based at 285 Madi- 
son Avenue, although it has 
bought the building and now 
occupies more than just the 
sixth floor. And it still does the 
advertisements for Jell-O. 

Y&R is the largest US-owned 
advertising agency and the sec- 
ond largest agency in the 
world after Dentsu of Japan. It 
has interests in public rela- 
tions, sales promotion, design 
and direct marketing; as well 
as advertising with world- wide 
billings of $55bn (£3.5bn) last 
year. 

Yet Y&R is something of an 
enigma in the international 
advertising industry. In an era 
when the publicly quoted agen- 
cies - such as Saatchi & 
Saatchi. WPP, Omnicom and 
Interpublic - have hogged the 
headlines with dramatic deals 
and, sometimes, equally dra- 
matic declines. Y&R has 
guarded its privacy as a pri- 
vate company. 

In the mid-1980s when 
Saatchi and WPP were rarely 
out of the limelight, Y&R 
seemed somewhat staid and 
stodgy. But more recently, 
when the marketing services 
sector has slumped on the Lon- 
don and New York stock mar- 
kets. it has looked enviably 
stable. 

The Y&R of today is run 
from the same comer office on 
the sixth floor of 285 Madison 
Avenue where Ray Rubicam, 
one of the agency’s founders 
wrote his advertisements. The 
office is now occupied by Mr 
Alex KrcLL who played profes- 
sional football for the New 
York Titans - forerunners for 
the Jets - before joining Y&R, 


initially in the creative depart- 
ment. 

The foundations for the lat- 
ter-day Y&R were laid in the 
1970s under Mr Edward Ney, 
one of Mr Kroll's predecessors 
as chairman. He developed the 
concept of the “whole egg” 
strategy whereby Y&R would 
offer a whole range of market- 
ing services to complement 
advertising. 

Y&R began in 1973 by buying 
Wunderman Worldwide in 
direct marketing.. It then 
acquired Cato Johnson, a sales 
promotion company, and Bur- 
son-Marsteller, an interna- 
tional network of public rela- 
tions consultancies. A few 
months ago it diversified into 
design by buying Landor Asso- 
ciates. the international con- 
sultancy based In San Fran- 
cisco. 

Originally Y&R had planned 
to go public to finance its 
expansion. But the US stock 
market slumped after the oil 
price rises of the early 1970s. 
Suddenly it seemed more 
advantageous to make acquisi- 
tions as a private concern. 
Y&R scrapped its plans for flo- 
tation. 

Mr Kroll is convinced that 
private status is an enormous 
advantage today. "First, we 
can offer stability to our 
employees,” he said. "Second, a 
public company has two clients 
- its advertisers and its share- 
holders - and sometimes their 
interests can clash. Our man- 
agement spends 99.9 per cent of 
its time working for our real 
clients.'' 

Last year Y&R strengthened 
its private status by effecting a 
legal change into a partnership 
of its 1,000 shareholders. Only 
active employees are allowed 
to hold shares. Even Ray Rubi- 
cam sold out when he left. He 
then went on to make even 
more money from real estate 
and banking in Arizona than 
he bad from advertising. 

At times the group’s private 
status has been useful for less 



Atox Kroll, chairman of Y&R 

salubrious reasons. Over the 
years Y&R has been scarred by 
a series of scandals. This 
autumn alone it bit the head- 
lines when Bette Midler, a 
singer, sued it for imitating her 
singing style in a commercial; 
when the rumpus over backing 
of Lord Einstein O'Ne ill & 
Partners’ breakaway from WPP 
was resolved; and when it was 
indicted by a US grand jury on 
charges of conspiracy and 
racketeering. 

The racketeering charges 
could have dealt devastating 
damage to a publicly quoted 
agency- Mr Kroll blanched 
when asked about their 
impact "It is business as usual 
here." he said. “We have not 
lost any business, but we have 
put on some new business. 
That is all I can say.” 

Meanwhile Y&R's manage- 
ment is tackling the task of 
strengthening its individual 
businesses, while integrating 


its different divisions into a 
coherent marketing services 
group. 

Y&R has already established 
its advertising agencies as a 
viable International network. 
Its chief challenge is to stave 
off the challenge of smaller 
agencies. Its main New York 
agency was recently restruc- 
tured - into a more flexible 
format where people work in 
smaller groupings - to 
counter criticism that it was 
becoming bland and bureau- 
cratic. 

On the international scene, 
it has introduced a “creative 
leadership programme" 
whereby the creative directors 
of all its agencies gather 
together once a year to discuss 
the quality of their output 

But the chief challenge is to 
use its expertise in the differ- 
ent disciplines to provide an 
integrated marketing service. 
It has begun by devetoping a 
formula whereby a “lead” 
account director from one dis- 
cipline maps out the marketing 
strategy for a client and then 
coordinates a coherent service 
from the other disciplines. 

Mr Kroll estimated that 
more than 200 of Y&R’s clients 
are already using the group's 
services in more than one dis- 
cipline. Yet Y&R, like most of 
its competitors, still has a long 
way to go before it can claim to 
offer a truly integrated market- 
ing service. 

“Of all the marketing groups 
Y&R has the best pieces La 
place to provide an integrated 
service,” said Mr Greg Ostroff, 
an advertising industry analyst 
with Goldman Sachs in New 
York. “Now it must prove that 
it can pull them together. That 
is its challenge for the future.” 

AHco Rawsthom 


DENTSU 


Giant taking on the world 


“Dentsu does more than any 
single corporation, angmhere in 
the world, to mould popular cul- 
ture." 

Karel van Wolferen "The 
Eni gma o f Japanese Pouter" ■ 
DENTSU is no ordinary advert 
rising agency. It is one dt the 
most p o wer ful institutions to 
Japan. Its influence extends 
beyond the media Into the 
highest echelons of Japanese 
politics and industry. 

Tear after year It has topped 
Advertising Age’s table of the 
world’s biggest advertising 
agencies. In last year’s league 
table Dentsu - with billings 
of 99.5bn - was comfortably 
ahead of its closest competi- 
tors, Young & Rubicam of the 
US and Saatchi & Saatchi of 
the UK. Its record is all the 
more remarkable In that, 
whereas Y&R and Saatchi are 
International agencies, its 
Interests are concentrated 
almost solely In one country, 
Japan. 

In the past Dentsu, like 
other Japanese marketing 
groups, has adopted a cautious 
approach to international 
expansion. It now intends to 
become more aggressive. Hie 
advertising agency that towers 
over the cultural life of Its 
own country to taking on the 
world. 

Dentsu dominates Its domes- 
tic market in a way which 
would be Inconceivable to any 
other country. Japan is the 
world's second largest adver- 
tising market, after the US. 
Denton's turnover cf Yt,i37bix 
(£5bn) is twice as high as those 
of Haknhoho, Us closest com- 
petitor. and almost as high as 
those of all the other top 10 
Japanese agencies combined. 

Dentsu is also a formidable 
force in the Japanese media. It 
accounts for a fifth of all 


advertising to ne w spapers, a 
sixth in m agazin es and a third 
of television advertising. 

The lightly, regulated struc- 
ture of Japanese broadcasting 
— where advertising agencies 
joatonly.hay compuireialsbnt 
. also sponsor programmes ~ 
'means timt JDentso, atop jprerts 
control over the -Content of 
programming. Its greatest 
strength is in prime-tima tele- 
vision, where it is. involved 
with half of all the program- 
ming on the five national TV 
channels. 

This means that advertisers 
have virtually no alternative 


its power over the media, ft is 
actively involved to television 
through Its minority share- 
holdings to TV channels and 
production companies. And it 
<*«n exercise indirect influence 
Jpcanse oljtto^kmta&tbeli^- 
east sjngte source of advertis- 
ing revenue for Japan’s hews- . 
papers and magazines.' 

In many western economies 
legislation exists to prevent 
advertising agencies from 
being so closely Involved with 
the media. The only possible 
parallel with Deaton Is that ot 
Gianni Agnelli's Flat to Italy, 
which Is not only the largest 


Dentsu is no ordinary advertising agency. 
Its influence extends beyond the media Into 
the highest echelons of Japanese politics 
and industry 


but to deal with Dentsu if they 
want to advertise on Japanese 
television. Given that mere te 
so concept of “client conflict" 
to Japan - where It Is custom- 
ary for agencies to work for 
several companies to the same 
industry - there has been no 
limit to Denton’s capacity for 
growth. 

Over the years Dentsu has 
used its dominance of tin tele- 
vision system not only to stave 
off domestic competitors, but 
also to prevent western agen- 
cies from penetrating the Jap- 
anese market. 

Dentsu has also protected its 
position with an impressive 
array of jinmyaku - or per- 
sonal connections - in politics 
and industry. It not only has 
dose contact with the ruling 
Liberal Democratic Party, bnt 
also employs the sons of sev- 
eral senior politicians and 
industrialists. 

Dentsu Is also protected by 


advertiser bnt also controls 
two of the country’s most 
influential newspapers and 
nuny magazines. 

Bnt In Japan, Dentsu’s 
power is not considered to be 
at all extraordinary. “Dentsu 
and the media, we are like 
brothers,” said one of the 
agency’s executives benignly. 

The “broth e rhood* 1 between 
Dentsu and the media dates 
bade to the agency’s earliest 
days when Hoshiro Mitsxmaga, 
a former Journalist, founded 
the company by offering 
articles to Japanese newspa- 
pers to return for advertising 
which he then wild to 


In the 1930s Denton was 
forced by new legislation to 
Choose whether to he involved 
In' advertising or hmhU»- It 
chose advertising. But to the 
1950s, when Japanese commer- 
cial television was struggling 
to get off the ground, it 


stepped- to by offering finan- 
cial and managerial support to 
the new. stations. Today It is 
doing the same with the new 

madia, . 

The sheer scale of Dentsu - 
nad ito, political power - has 
■ made ft atotost tovutoficable-to 
Japanese advertising. Its com- 
petitors carp that ft is losing 
its creative edge. But there Is 
still no sign of Dentsu losing 
its dominant position in 
JajMiiV extraordinarily buoy- 
ant advertising market . 

In spite of its success to Its 
own country, Dentsu has been 
reticent about expanding over- 
seas. its first foray into 
another country - when it fol- 
lowed Toyota into the US in 
the 1950s - was a failure. 
Chastened by this experience 
Dentsu has since concentrated 
on consolidating its position to 
Japan. 

Denton already has a string 
of small overseas agencies and 
a third of HDM, the interna- 
tional network it runs as a 
Joint venture with Y&R and 
Eorocom of France. But the 
appointment of Mr Gohei 
Kognre, as president four 
years ago, signalled a change 
to Its International strategy. 

The company has decided 
that it can not depend on 
start-ups and Joint ventures if 
it is to become a serious player 
to Inte rn ati on al advertising. It 
now believes that the acquisi- 
tion of an existing network - 
or networks -- is the only 
solution. 

Dentsu -could afford to 
acquire almost any agency it 
chose. Whether file colossus of 
Japanese culture will succeed 
to its bid to become a force to 
international advertising 
remains to be seen. 

Alice Rawsthom 


NEW CITY DEVELOPMENT 



I 


1-2 CRAMV00D STREET EC1 

35.400 SQ FT AIR CONDITIONED 
OFFICES WITH PARKING 

THE BUJIOWG IS FINISHED TO AN 
EXCEPTIONAUY HIGH STANDARD THROUGHOUT 
IMMtOlAIC OCCUPATION 


Jones Lang 

'Sf^Wdotton 


01*638 6040 01-493 1006 


MONCKTON 

I A COMPANY I 


IT IS ID o’clock on a perfect 

Kw glhdi a nfj r i T M H mnrnmg In 

the grounds of a fine stately 
home In Hertfordshire, to 
southern England. 

Dazzling sunshine filters 
through the red and gold 
leaves of the chestnut trees. 

A mist rising from the 
ornamental hangs to the 
crisp, cold air to front of the 

summerhouse. 

Behind the summerhouse 
snakes a vivid bine plastic 
pipeline belching what seems 
to be some sort of gas. It is 
dry ice. By the time It rolls 
down the grassy bank Into 
the lake, the dry ice looks Hke 
mist. 

Perched on a fallen log Ms 
Rosie Arnold, art director, 
explained apologetically; 
"There was plenty of real mist 
rising naturally off the lake 
when we arrived at six o'clock 
this morning. But it has 
disappeared so we had to 
create our own." 

Ms Arnold is from Bartle 
Bogle Segarty, the largest 
privately-owned advertising 
agency to the US. The reason 
that she is overseeing the 
creation of fake mist to the 
grounds of the stately home 
is that BBfl Is shooting a new 
television commercial there 


Lisa O’Keliy watches the making of a television commercial 

A shoot in search of spark 


See Sony, one of its diesis. 

The commercial is for the 
TR55 Camcorder, the world's 
smallest video camera. 

Ms Arnold Is not short of 
companions. She has come 
on location with a Sony 
executive; a copywriter and 
two account executives from 
her agency; a film crew of 40; 
a team of c ate rers; two bird 
handlers; a dog handler; a 

make-up artist; and three 
actors. Two of the actors are 
children with a mother and 
grandmother In tow. 

Most of them have been at 
the stately home since dawn, 
having put to 14 hours of work 
on the previous day. They are 
hoping to wrap everything 
up by ni ghtfall. 

The plot of the commercial 
Is deceptively simple. A couple 
poshing a pram are strolling 
with their tog beside a lake. 
The man Is videoing the scene. 
The woman stops to throw 
a stick for the dog and 


suddenly the pram rolls away. 
They turn to horror as It hits 
the edge of the lake. 

At this point a large hand 
enters the scene and takes the 
camera from the “man” who 

is. It emerges, a child. So is 
bis “wife". The pram turns 
out to be a toy with a teddy 
inside. The large hand belongs 
to the children’s father. All 
of this Is intended to prove 
how compact and easy to use 
the TRW Camcorder is, 

ft all sounds so 
uncomplicated. Bnt making 
a nine year-old girl and a 12 
year-old boy look like adults 
and a miniature dog to look 
like a wolfhound Is by no 
means easy. 

“We looked at lots of 
different ways of doing this 
but decided not to cheat, 
because it would have 
counteracted tlte surprise, " 
said Mr Chris SartWill, who 
Is directing the commercial 
for Ridley Scott Associates. 


“So we are nstog all the 
legitimate tricks to make them 
look olden low camera wigiw; 
silhouettes and special props. 
The only sneaky thing we are 
doing is to run the camera 
slightly faster than normal, ■ - 
to smooth out the cfriMMi' way 
that they move.” 

Mr Bartwill has spent modi 
of the day before and most 
of that morning crawling on 

his belly, calculating the right - 

camera angles to achieve the 
desired effect Bach shot seems 
to take hours to complete. 

“The production values on 
a commercial have to be. 
perfect," explained Ms Arnold. 
“It may be only 30 seconds 
long but It has to be riveting 
because it will be shown so 
many tim es, 

“A detail out of place to a> 
soap opera or a feature film 
does not matter* But every . 
detail counts to n 
commercial." 

these important details 


keep the technicians on the 
shoot very busy. Bnt time 
tends to drag for the onlookers 
from the agency and its client. 
*Tt is marginally less 
i n t e resting than ' mrtnMnv 
paint dry," said KBH account ' 
director Mr Stephen Gash, 
stamping his fret and 
. buttoning Ms baseball Jacket _ 
against toe cold. 

“People think of a shoot as 
a glamorous day out for the 
Clfefft and agency hot really 
I would much rather be back 
at the office,*' said Ms Brenda 
Stoss, Sony's advertising 
manager. haven mound 
of paperwork on my desk. 
Being here is cold, tedious and 
tiring." 

Nevertheless Ms Jones 
attends every Sony shoot. *1 
like to be on the spot in case 
.anything goes wrong or they; 
'need technical advinn^she 
*said. And, as Sfr Gash points' ' 
oat, since she signs the cheque 
■it is only reasonabl e that Ms 


Jones should be there. 

How much the cheque 
amounts to on tw« occasion, 
n obody is prepared to say. 
Commercials can and do cost 
up to Elm. But a conserv a t i ve 
estimate would put the 
production budget on one 
at around £150,000. It Is a 
standard shoot with no special 
effects or expensive extras. 
The most expensive item on 
the budget was weather 
insurance at £8,700: 
apparently an essential, 
especially when filming in the 
UK. 

Lunch was the. high-spot 
of the day. But the crew was 
disgruntled as demand for 
blackberry crumble 
outstripped supply. 

A touch of old-style glamour 
waa supplied by the emergence 
of Mr Oliver Lewis-Barday, 

the agency account manager 

with a bottle of chilled 
champagne for Ms Jones. 

The rest of the company 
abstemiously refused a tipple 
as they braced themselves for 
an aftern oon spent watching 
the crew take close-up shots 


tokeepwarnL 
. But who mod advertising 
was glamorous? 






V* 




THURSDAY DECEMBER 7 1989 




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There is no greater waste of money than ta lkin g to people who 

are. never going to buy your product. 

/ The question is, who is most likely to buy it? .And the time 

honoured answer is those who*ve bought it before. 

• You know who they are. Write to them. Send them a card. 


a letter, a catalogue. 

This way they may soon be se ndin g you a cheque, 
for more information on our services, write to Gra h a m Hughes, 
Head of Business Marketing, Dept. AFT, FREEPOST Royal Mail 
Headquarters, 33 Grosvenor PI., London SW1X 1EE or call 0800-900965. 


Business 


















VI* 


FINANCIAL TIMES THURSDAY DECEMBER 71989 


( INTERNATIONAL APVERTISING~6~^) 


World-wide communications networks are some way off, writes Raymond Snoddy 

Master plan still at embryonic stage 


LAST YEAR Ur Rupert 
Murdoch, chief executive of 
News Corporation, asked him- 
self a series of rhetorical ques- 
tions In public about the future 
of the media business. 

Is a global communications 
network a reality? “My 
unequivocal answer is yes,” 
replied Mr Murdoch. 

Are there really going to be 
world-wide media networks? 
“My answer is yes, both print 
and electronic,” said the man 
who already owns one of the 
largest print and electronic 
media networks in the world. 

Is it really going to be possi- 
ble for an advertiser to 
achieve. In practice, a single 
order with the media of his 
choice across the world? 

“Again my answer is yes,” 
said Mr Murdoch who since 
that prediction was made has 
launched the four satellite 
channels of Sky Television and 
committed himself to keeping 
the venture going for up to five 
y ears if necessary to break into 
profit. 


Mr Murdoch's prediction 
about placing a single media 
order world-wide is perhaps 
still a shade futuristic. The 
media world is not yet one. 

But the News Corporation 
chief executive whose media 
interests include everything 
from Twentieth Century Fox 
film studios and Fox Televi- 
sion, the embryo fourth net- 
work in the US, to five na ti o n al 
newspapers in the UK as well 
as Sky Television, is almost a 
global personification of the 
dramatic changes now effect- 
ing the structure of the media. 

The whole concept of globali- 
sation of the media in general 
and of advertising markets in 
particular, combined with the 
push towards 1992, the year 
when the European Commu- 
nity aims to create a single 
European market, has become 
almost a cliche. As a result 
there is a danger of under-esti- 
mating the dramatic changes 
now effecting the media in 
Europe and virtually all of the 
developed world. 


The main structural changes 
effecting media companies, 
advertising agencies and 
advertisers is being driven by a 
cocktail of causes that include: 

■ the technology of satellite 
and cable which has, at least in 
theory, removed for ever the 
limits on the number of televi- 
sion channels available 
because of the shortage of 
over-the-air broadcasting 
capacity, it is far from clear 
however how long it will be 
before satellite channels, even 
those aimed at the European 
market, such as Super Chan- 
nel, will be able to earn sub- 
stantial sums of money from 
advertising. Both Mr Murdoch 
and his UK satellite rival Brit- 
ish Satellite Broadcasting will 
be very dependent on film sub- 
scription revenues - at least 
in the early years. 

■ a process of deregulation 
driv e n by a mixture of technol- 
ogy and ideology of the sort 
shown by the British Govern- 
ment's commitment to greater 
choice and competition (with- 


out damaging quality). 

Although deregulation has led 

to an increase in the number of 
television channels - new 
channels are on the way, for 
instance, in Spain and the UK 
- the process has, however, 
been for from total There have 
been international moves both 
at the Council of Europe and at 
the Europe Commission to set 
new minimum standards for 
trans-frontier broadcasting 
covering everything from the 
proportion of European con- 
tent in programme schedules 
to the frequency and amnnnt 
of television advertising. 

■ the growing strength of mul- 
ti-national advertisers through 
a process of mergers and take- 
overs which Has in turn led to 
a marked increase in interna- 
tionally co-ordinated media 
buying particularly across 
Western Europe. 

A wide range of media ana- 
lysts have documented both 
the growing power of multi-me- 
dia corporations such as Ber- 
telsmann of West Germany, 


Hachette of France and Finlnv- 
est of Italy, the corporate 
vehicle of Mr Silvio Berlusconi, 
and the growing commercial- 
ism of the European media. 

Consultants Booz Allen & 
Hamil ton found that in the 

past 18 months there were 
mergers and acquisitions total- 
ling £3bn in the European 
broadcasting industry with the 
arrival of new players such as 
Bouygues. Compagnle des 
Eaux, Fiat and Matra, each 
attracted by the fact that 
broadcasting in all its forms is 
forecast to be a £20bn industry 
in Europe by 2000. 

The fundamental changes in 
the structure of the media 
have been matched by changes 
in the media buying market. 
According to stockbrokers 
James Capel there has been a 
steady growth of media inde- 
pendents and concentration of 
media buying into a smaller 
number of hands over the past 
eight years. 

“The indications within the 
past year, however, are that 



Hadta moguls; Rupert HKucdoch snd SUvto Bs rtu a c owl 


the trend is begi nn i n g to dra- 
matically accelerate with 
developments in Europe lead- 
ing the way,” James Capel 
argues In a paper published 
last month. 

To begin with the increase in 
the market share of media 
independents was driven 
locally. But more recently the 
concentration of media owner- 
ship “has led many multi-na- 
tional clients to look to coordi- 
nate their buying and 

planning on a pan-European 
and occasionally international 


basis in order to provide an 
equally strong representation 
on the buying side.” 

However, they will face 
incr easing l y complex decisions 
and the process of liberalisa- 
tion will not just mean more 
rhapr^ is in. more homes. In 
many countries the relation- 
ship between advertiser and 
broadcaster could begin to 
change with advertisers begin- 
ning to exercise a more direct 
influence over the nature of 
programming. A greater reli- 
ance on $ponsorto programmes 


and on WiSSSSS 
likely where such practices are 

^forbidden by regulsttofl. 

Yet the evidence from tire 
multi-channel cable 

independent j^vtetoa 

has most certainly fragmented 
the US television audience. 
Since 1970 it has afop 
the audience share <£the ttoja 
main US netwftrksfiwnaliMSt 
SO per cent to 

and the trend- is still down- 
wards. ’ 

Over the same irerfod the 
share of national advertising 
revenue has fallen but only 
from 60 per cent to 50 per cent 
and the actual amount has 

Increased significantly In real 
terms from 3 &lbn in 1980 *& 
jgjbn last year to constant 
1980 prices.- 

The US experience suggests 
that however satellite televi- 
sion channels are launched or 
however sophisticated the cen- 
tralised .. media .. buying 
operations become advertisers 
in Europe win, foe the foreseea- 
ble future, still have to pay 
dearly to reach mass audiences 
through existing commercial 
television statio n s. . 


MEDIA BUYING 


A market revolution 


FOR YEARS media buying has 
been cast in the unenviable 
role of one of the least attrac- 
tive areas of advertising. But 
in the past year or so it has 
leapt into the limelight in a 
wake of international deals 
and counter - deals. 

Media buying is the business 
of buying space for advertise- 
ments on television or in news- 
papers and magazines. Tradi- 
tionally it has been conducted 
by specialist media depart- 
ments within advertising agen- 
cies, or by media independents, 
which are specialist media 
companies. 

Bat the concentration of 
media ownership among a 
handful of international groups 
and the growth of multina- 
tional advertisers has led to a 
revolution on the European 
media buying scene. 

Saatchi & Saatchi, the larg- 
est UK advertising agency, ha« 
centralised its media baying 
into Zenith, a giant buying 
group. WCRS,. another UK 
agency, has reduced its 
involvement with advertising 
- the traditional base of its 


business — in favour of taking 
control of Carat, the French 
media buying concern. 

Other advertising agencies 
are reappraising their position 
in media. The challenge is to 
devise the best stru c ture for 
coping with the rapidly chang- 
ing media scene. 

The revolution in media buy- 
ing has tairwi p lace a gainst th e 
background of an explosion 
within the European media 
industry. The deregulation of 
national television systems is 
expanding the advertising 
opportunities in many coun- 
tries. TJntas. the international 
agency, predicts that by 1995, 
there will be 150 main commer- 
cial channels in Europe, com- 
pared with 40 today. 

The publishing sector is also 
expanding with the launch of 
new newspapers and maga- 
zines. The progress of new 
printing technology has 
enabled the big European pub- 
lishing houses to expand 
within their own markets and 
into other countries. 

This growth will boost adver- 
tising in <wnh marke t But it 


will also cause fragmentation 
making it more difficult for 
advertisers to target particular 
categories of consumers. This 
will demand greater skills and 
resources from agencies in 
media buying. 

These problems will be com- 
pounded by the conc e ntration 
of ownership in the hands of a 
few, increasingly powerful 
players. In the 1990s six forces 
- Mr Axel Springer and Ber- 
telsmann of West Germany, Mr 
Silvio Berlusconi of Italy, 
Groupe Hachette of France, 
together with Mr Robert Max- 
well and Mr Rupert Murdoch, 
both based in the UK - will 
dominate the European media 
market. 

The rationale behind Zenith 
and Carat is that, by combin- 
ing the media buying of sev- 
eral agencies they can cut 
costs by benefiting from econo- 
mies of scale in an increasingly 
capital intensive area. They 
could also, or so the theory 
goes, have enough buying 
clout to counter the growing 
power of the international 
owners. 


But this poses a serious 
threat to the profitability of 
the media buying operations of 
other agencies. Zenith and 
Carat could use their critical 
mass to undercut their compet- 
itors. It is tMfi threat that baa 
prompted the other agencies to 
review their media baying 
arrangements. 

One option is for agencies to 
band together in media clubs. 
Media clubs have already been 
formed in southern Europe to 
achieve critical mass against 
powerful forces like Carat. 
Clubs have also been estab- 
lished for several years in 
highly regulated markets, such 
as Scandinavia the Nether- 
lands, where agencies have 
joined forces to reduce over- 
heads. Other agencies are pur- 
suing different options. 

The UkeUest outcome of all 
this activity will be the emer- 
gence of a handful of top Euro- 
pean buying shops, probably 
including Carat, Interpublic, 
the Media Partnership and 
Zenith. The outlook for wmaii 
local operations is still fairly 
optimistic. Bat there is a ques- 
tion marie over the future of 
the media departments of mid- 
dle-sized agencies. 

Whatever the outcome, the 
traditional world of media buy- 
ing will never be the wmp 

Jo Vale 


ZENITH 


Clout and the ‘critical mass 


THEY ARE known as “those 
hooligans at Zenith." so it is 
rather disappointing to walk 
into Bri tain ’s biggest indepen- 
dent media buying business to 
be greeted by an atmosphere of 
in tense , if slightly frantic con- 
centration, and not a gold 
medallion in sight. 

Zenith is in the vanguard of 
the revolution which is sweep- 
ing through the European 
media buying scene. It was 
formed a year ago to centralise 
the media buying for all the 
advertising agencies owned by 
Saatchi & Saatchi in the UK. 

The rest of the ad industry 
likes to think of the Zenith 
buyers as barrow boys. But 
Zenith prides itself on hiring 
graduates. Young men and 
women tap away at computer 
keyboards with an appearance 
of great productivity, make 
polite requests on the tele- 
phone and scribble away at 
their schedules. 

Zenith’s directors explain 
grandly that the media busi- 
ness is becoming too complex 
for the old school of “barrow 
boy” buyers. “Now we are 


looking for people who can 
grasp the fact that ZwmMi is 
trying to change the face of 
media buying” said Mr Nick 
Lockett, new business director. 

Out on tiie TV buying floor, 
a buyer in an open-necked 
shirt is chewing gum jiM tap- 
ping bis calculator. He turns to 
his neighbour uneasily. “You 
buying this place, then?” he 
asked. “Why not boy it with 
me?” win neig hbour shr u g A ,, 
The phone rings, and the man 
with the open-necked shirt 
falls on it, bravado over with 
for the time being. 

Meanwhile, Ms Christine 
Walker, director of broadcast 
buying, is exercising what 
Zenith’s detractors like to call 
its ‘clout*. She is firing off a fax 
to Thames Television com- 
plaining about the “bizarre and 
cluttered” quality of a commer- 
cial break featuring two of her 
clients' commercials broadcast 
.the previous evening. 

Zenith's co m petitors accuse 
it of using its media buying 
muscle, its “clout”, to its own 
advantage. At Zenith they do 
not like the word clout They 


favour the term “critical 


“We had problems with one 
newspaper group,” said Mr Roy 
Jeans, the regional press buy- 
ing manager. “But we have the 
critical mass. They have seen 
no business from Zenith this 
year. It has cost them half of 
their revenue.” 

Critical mass reflects the 
way that Zenith’s employees 
like to see themselves - as 
doughty fighters against vast 
media conglomerates and their 
equally vast clients. 

The truth is that media buy- 
is not really all that com- 
_ icated. Even the television 
market is little mare than a 
futures market, which would 
make the average swaps dealer 
in the City of London gasp at it 
simplicity. But the Zenith deal- 
era cfo hare the trader’s patter. 

On the national press buying 
desk, Mr Paul Braithwaite is 
trying to buy into the Sunday 
Correspondent fra: the Halifax 
Building Society. The space is 
all taken. Mr Braithwaite sup 
gests they could move another 
advertiser out. 


*1 

fog 

puc 


The Correspondent -calls 
back. “Oh great,” said Mr 
Braithwaite. “He has studied 
me up in the past You have 
done me a bit of a favour there. 
You are on the way to redeem- 
ing. yourself. Now could you 
move the ad forward a hit?” 

By the end of the afternoon, 
the shouting -has died. down. 
The television, buyers are all 
busy with their calculators and 
their pencils, studious gradu- 
ates again. • 

But suddenly a rumour 
breaks; out. that a national 
newspaper has decided to ran 
a weekendTTV campaign at the 
last mbtote. . This cotud mean 
that all the slots; booked 'by 
Zenith are atrisk. 

“What we do?” Mr 
Thn Gteatrex. a TV buyer. “If a 
Mg advertis e r came along to -a 
TV company and said *W8 must 
have this slot', the TV com* 
peny could put fo tiKxr com- 
mferciaT arttL say that ttw tape 
mariifiw had broken down and 
your own ads wpre lost in 
transmission.” 

: ' Qinddiw BwfeU 


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1989 CANNES AWARD WINNERS AMONG THE TOP 10 AGENCY GROUPS. 




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1989 CANNES AWARD WINNERS AMONG THE TOP 10 AGENCY GROUPS; 


When a Frog marries a Bulldog 



s start 



Last year over a thousand agencies from all round 
the world entered their television commercials to the 
Cannes Advertising Awards. 

And, giving five points . for a Grand Prix, three 
points for a Gold, two points for a Silver and one for 
a Bronze, you can see how the world’s leading agencies 
fared on the left. 

In only its first year of life, WCRS Worldwide was 
proud to have come second to BBDO. 

- Now we’ve become Eurocom WCRS Della 
Femina Ball, it’s hot Just the name that’s bigger. 


~ Other leading European agencies have joined dur 
network bringing their own Cannes winning adver* 
rising with “them. In fact, if we’d had them within our 
hew network last year we’d have -been joint wfruiers 
With BBDO. ; - ^ ’ 

If you’d give us a ring we’d be happy to show yoti 
how those winners at Cannes were winners :in 'the 
marketplaces of the world. 

S° fW^ents-rare Reaping ahead, too.' 

Eurocom Wcrs Deila pemina ; 

172 DRURY LANE.XONDON WC2B 5QA. TELEPHONE: 01-242 2800. FAXr Ot-24z’ 634X ' 


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